Heavy equipment maker Caterpillar Inc. (NYSE: CAT) is scheduled to report first-quarter earnings before markets open Friday morning. Analysts are estimating earnings per share (EPS) of $0.68 and revenues of $9.39 billion, far below the $1.86 EPS and revenues of $12.7 billion in the year-ago first quarter.

Ahead of the report, the company announced on Thursday that year-over-year retail sales for the month of March fell 13% globally and 8% in North America. Bad as that may seem, it’s an improvement over a 15% drop in January and a 21% decline in February.

The Construction Industries segment posted a sales drop of 8% year over year in March. The Asia/Pacific region posted a sales increase of 7% in March, the only region to post a gain in any category in any of the past three months.

Sales in the Resources Industries segment fell 25% worldwide, with plunge of 55% in the Asia/Pacific region. Again, the global drop is smaller than either January (down 35%) or February (down 42%).

The big hit came in sales in the Energy & Transportation Retail Sales group, down 41% worldwide in March. Sales to the oil and gas industry were down 51%, worse than a drop of 34% in January and 36% in February.

On Wednesday, Moody’s Investors Service lowered its ratings outlook on Caterpillar and its financial services business from Stable to Negative while maintaining A2 long-term and Prime-1 short-term ratings on both entities. The agency noted:

Moody’s revised the rating outlook to negative because of the challenges CAT faces from weak demand in its Resource Industries segment that we believe will extend at least into 2017, and the additional pressure this will place on the company’s credit metrics. The Resource Industries segment had generated 31% of sales and 53% of Machinery, Engine & Transportation (ME&T) operating profits at the last peak. CAT has a long history of successfully contending with cyclical downturns, but the current falloff will be the longest and most severe in the company’s history. Moreover, Moody’s sees little evidence of a near-term recovery, and expects that when demand begins to improve the recovery will be more modest and protracted than during past upturns.

Despite these pressures, CAT will retain significant operational strengths that underpin the A2 rating, and should preserve its position as the most formidable competitor in the construction and mining equipment sectors. These strengths include: reputation for the industry’s highest-quality equipment; most extensive product array; broadest geographic footprint; and, most formidable dealer network.

The stock traded up about 0.1% late in the noon hour on Thursday, at $79.02 in a 52-week range of $56.36 to $89.62. The consensus price target on the stock is $63.00, according to Thomson/First Call.

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