Industrial Profit Warnings Mount: Dover Joins Honeywell, PPG
Manufacturer Dover (DOV) on Monday cut its full-year sales and profit forecasts, due in part to weakness in some oil and gas markets, and a global economy that it expects to remain sluggish, adding to similar warnings from industrials like Honeywell (HON) and PPG Industries (PPG).
Dover — which makes equipment that helps oil and gas producers, as well as refrigeration equipment — slashed its full-year earnings per share forecast to $3.00-$3.05 from an earlier outlook for $3.35-$3.45. Dover also now sees full-year revenue down 4% to 5%, compared to earlier guidance for a 3%-5% decline.
Analysts see EPS of $3.34 on a 1.3% revenue decline.
"The primary factors driving this revision are generally weaker capital spending across several industrial end-markets, continued weakness in longer cycle oil & gas exposed markets, and continued headwinds in our retail refrigeration business related to production inefficiencies," the company said in a statement.
Shares sank 6.35% to 67.65 in the stock market today, breaching support at their 50-day line and nearly blowing through the bottom of a cup base after climbing closer to a breakout last week. Among other diversified manufacturers, General Electric (GE) was up 0.2% and United Technologies (UTX) was flat.
Dover also said it would complete its acquisition of Wayne Fueling Systems in the first quarter of 2017, later than initially expected, due to U.K. regulators' concerns over competition. In June, the company said that acquisition would likely close in the back half of 2016.
Dover's downbeat forecast comes after Honeywell on Thursday trimmed its own full-year guidance, saying a weaker oil industry, along with struggles in emerging markets, have hurt aircraft demand.
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PPG Industries, which makes paints and coatings for the construction, industrial and other markets, on Friday also warned on its third-quarter results.
PPG said it was "disappointed with this quarter's EPS growth rate as we continue to operate in a sluggish economic environment with no clear near-term catalyst for improving global GDP growth."
Honeywell stock was flat Monday after sinking 7.5% Friday, while PPG edged up 0.9% Monday after diving 8.3% Friday.
Despite concerns about the energy sector, it is expected to cease being a drag on the overall S&P 500 in the fourth quarter as oil prices rebound.