posted $14.15 billion in second quarter sales and revenues, compared to $14.62 billion in the second quarter a year ago, a 3.3-percent decline, although profit per share increased from $1.45 per share a year ago to $1.57 per share this year.
Decreases in mining industry sales were partially offset by increases in the construction market. The volume decrease was primarily the result of lower end-user demand for mining equipment as customers are continuing to reduce capital expenditures. The decrease was partially offset by the favorable impact of changes in dealer machine andinventories, as dealers reduced inventories about $500 million during the second quarter of 2014 compared to a decrease of more than $1 billion in the year-ago period.
Sales declined in Asia/Pacific and Latin America (14 percent and 16 percent respectively) because of weak mining sales and a slowing construction equipment industry in China. However, sales increased 6 percent in North America, primarily because of improving demand for construction equipment in the United States.
“We’re pleased with our second-quarter results, particularly the improvement in profit,” said Caterpillar chairman and CEO Doug Oberhelman. “We increased the bottom line despite a weak quarter for our Resource Industries, which is principally mining. Three key things are contributing to the continuing strength of our financial results – the diversity of our businesses, substantial success in operational improvements through the execution of our strategy, and the strength of our cash flow and balance sheet.
“Our Construction Industries and Energy & Transportation segments continue to improve. Construction Industries had a good quarter with sales up 11 percent and operating profit up 83 percent from the second quarter of 2013. The improvement in Construction Industries, along with sales stability and record profit from Energy & Transportation, has helped us improve profit despite the downturn in the mining industry.”
Caterpillar’s outlook for the year remained the same, predicting relatively flat economic conditions. “After a sizable drop in sales and revenues in 2013, our ongoing forecasting process has, since the third quarter of last year, pegged 2014 as a roughly flat year for sales,” Oberhelman added. “That’s still the case. There have been plusses and minuses, but they’ve both been relatively muted in the context of our total sales and revenues. While we’d certainly like to see improvement in economies around the world, and more specifically, the mining industry, the stability that we’ve seen this year has helped. Even though sales and revenues are relatively flat compared to last year, we’ve improved the bottom line with better execution and continued focus on costs.”
Caterpillar’s outlook for sales and revenues is now a range of $54 to $56 billion. The previous outlook expected a range of $53.2 to $58.8 billion. The outlook was altered slightly because of an expectation of lower sales of construction equipment in developing countries.