Marking the fourth straight year of double-digit profit growth and the third consecutive year of record sales and profit, Caterpillar last week reported 2006 sales and revenues of $41.5 billion and profit of $3.5 billion, or $5.17 per share, up 28 percent from a year ago. The company also reported a record fourth quarter with sales and revenues of $11.0 billion and profit of $882 million, or $1.32 per share, up 10 percent from last year.
"2006 was an extraordinary year for Caterpillar,” said chairman and CEO Jim Owens. “It was the best ever in terms of top-line sales and revenues and profit. The commitment of our employees, dealers and suppliers allowed us to achieve these financial results, and I thank them for their hard work."
For the year, sales and revenues increased $5.2 billion — $3.3 billion from higher sales volume, $1.5 billion from improved price realization, $315 million from higher financial products revenues and $78 million from the effects of currency.
2006 profit increased $683 million from 2005. The increase was largely due to improved price realization and higher sales volume, partially offset by higher core operating costs.
For the fourth quarter, sales and revenues increased $1.3 billion — $951 million from higher sales volume, $190 million from improved price realization, $146 million from the effects of currency and $53 million from higher financial products revenues.
Fourth-quarter profit increased $36 million from 2005. The increase was due to improved price realization and higher sales volume despite an unfavorable geographic/product mix of sales and was largely offset by higher core operating costs.
"What Team Caterpillar was able to accomplish in 2006 is a reflection of the diversity of the industries we serve, the global need for our products and services and the strength of our partnership with our dealers and suppliers," Owens said. "We took advantage of our financial success — including strong cash flow — to fund growth in capacity, continue aggressive new product development, complete the strategic acquisition of Progress Rail, increase the dividend rate by 20 percent and buy back more than $3 billion in stock. These actions will deliver long-term benefits for our customers, employees and stockholders."
In 2007, the company expects another record year with sales and revenues in a range of $41.5 to $43.6 billion, which is flat to up 5 percent from 2006, and profit in a range of $5.20 to $5.70 per share.
"I'm anticipating great things for Caterpillar in 2007. Despite a sharp decline in two key North American industries — on-highway truck engines and U.S. housing — and an expected reduction in dealer inventories, we are projecting another record year in 2007," Owens said. "We expect to improve profit per share at a higher rate than sales and revenues, and that means a key focus in 2007 will be cost management."
Peoria, Ill.-based Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and a wide and growing offering of related services.