Caterpillar Posts Better-than-Expected Third Quarter Profits
Caterpillar posted a better-than-expected profit of $1.63 per share for the third quarter of 2014, a 12.4-percent increase compared to $1.45 per share in the third quarter last year. Analysts expected a weaker result based on Caterpillar’s prior announcement of weak sales of mining machinery, however, strong sales to energy and construction markets more than offset weakness in the mining segment.
Total sales and revenues were $13.549 billion, compared with $13.423 in the year-ago quarter, a 9.3-percent hike.
“We’re pleased with the third-quarter profit improvement considering world economic growth remains slower than we’d like,” said Caterpillar chairman and CEO Doug Oberhelman. “We’ve continued to focus on what we can control – cost management and operational execution. We continue on a Lean manufacturing journey and are focused on improving safety, quality, efficiency and inventory turns. We’re making progress and it is beginning to be reflected in our results. The diversity of the businesses we’re in and the strengthening of our operational performance have been key to helping us improve results and our competitive position in this weak economic recovery. Our broad geographic reach and manufacturing footprint help mitigate the impact of currency fluctuations.
“In addition to the profit improvement, we have a strong balance sheet and through the first nine months of the year, we’ve had good cash flow. So far this year, we’ve returned value to our stockholders by repurchasing $4.2 billion of Caterpillar stock and raising our quarterly dividend by 17 percent.”
The company now expects 2014 sales and revenue to be about $55 billion, the middle of the previously set outlook range of $54 to $56 billion. Profit-per-share expectations for the year continue to improve. Caterpillar expects world economic growth could improve in 2015, with potential for increased investment in infrastructure in countries such as the United States, India and Turkey.
“At this point, our view of 2015 sales and revenues isn’t significantly different than 2014,” added Oberhelman. “Our order backlog was up a little in the third quarter and was slightly higher than at this point last year. We’re hopeful that economic growth will improve in 2015, but are mindful of the uncertainties and risks.”
In the third quarter, sales increased 15 percent in North America, primarily because of higher demand for oil and gas and transportation applications and construction equipment. Sales decreased 21 percent in Latin America on lower end-user demand. Asia/Pacific sales dropped 7 percent on lower construction and mining sales. Higher sales in Europe were offset by declines in the CIS as a result of political unrest.
Caterpillar Inc. is based in Peoria, Ill.
