Caterpillar today disappointed investors by not raising its 2018 earnings forecast yet again, raising fears that the heavy-duty equipment maker may be signalling a slowdown despite posting better-than-expected quarterly profits.
The stock tumbled 7.8% after the opening bell on Wall Street, weighing on the overall US stock market.
The company kept unchanged the 2018 adjusted profit per share outlook of $11-12 per share, which did not go down well with investors who were expecting yet another upward revision in the earnings guidance.
For the third quarter, Caterpillar reported an adjusted profit of $2.86 a share, up from $1.95 a share, last year. Analysts on average had expected $2.85 a share, according to Refinitiv.
Net profit for the quarter to September came in at $2.88 per share, compared with $1.77 last year.
The Illinois-based company has boosted the full-year profit outlook twice this year, betting on a global economy that is poised to record its strongest growth since 2011.
However, China's economic growth has slowed to its weakest pace since the global financial crisis and the International Monetary Fund cut the global economic growth forecasts for 2018 and 2019, so investors have turned cautious.
Caterpillar shares are down about 25% since late January amid deepening US-China trade tensions and soaring raw material and freight costs for local manufacturers.
In a possible sign of softening demand, the order backlog at the end of the third quarter was about $400m lower than the previous quarter, with decreases across the three primary segments.
Caterpillar also acknowledged an increase in manufacturing costs in the latest quarter due to elevated freight costs, and higher steel prices and import tariffs.
The company said tariffs will cost it about $40m in the latest quarter. However, for the full-year, it now expects the impact to be at the low end of the previously provided range of $100-200m.
To offset the rising input cost, it will increase the prices of its machines and engines in the range of 1-4% globally from January 2019.