Driven by the continuing improvement in global demand for its products and its focus on cost management, Caterpillar Inc. last week reported first-quarter 2011 profit per share of $1.84 — an all-time quarterly record and a 411-percent improvement from $0.36 in the first quarter of 2010. First-quarter sales and revenues of $12.95 billion were up 57 percent from $8.24 billion in the first quarter of 2010. Profit was a record $1.23 billion in the quarter, an increase of 426 percent from $233 million in the first quarter of 2010.
“I am very pleased with our first-quarter results — demand continued to improve, we increased production, cost control was excellent, and our operating profit margin improved,” said chairman and CEO Doug Oberhelman. “We generated more than $1.6 billion of operating cash flow from our Machinery and Power Systems (M&PS)businesses, an increase of more than 50 percent, and our debt-to-capital ratiodropped more than 4 percentage points from year-end 2010.
“While we posted great financial results for the quarter, we were saddened by the disaster that struck Japan following the earthquake and tsunami in early March. Our thoughts and prayers are with the people in Japan who have been impacted by this disaster, including those at one Cat dealer, where two employees perished in the tsunami. I want to recognize and thank our employees in Japan, along with Caterpillar employees around the world, our suppliers and dealers as they have worked tirelessly to minimize the impact on our operations from the disaster.”
First-quarter profit was $1.23 billion compared with a profit of $233 million in the first quarter of 2010. The improvement in profit was primarily a result of significantly higher sales volume. Price realizationwas favorable, but the impact was more than offset by higher manufacturing, selling, general and administrative and research and development expenses. In addition, $90 million of the improvement was due to the absence of a tax charge from the first quarter of 2010 related to enactment of U.S. health care legislation.
The outlook for 2011 has improved. Sales and revenues are now expected to be in a range of $52 to $54 billion and profit in a range of $6.25 to $6.75 per share. The previous 2011 outlook was for sales and revenues to exceed $50 billion and for profit to be near $6.00 per share. The revised outlook reflects higher expected sales and revenues and higher profit per share than our previous record year of 2008 when sales and revenues were $51.3 billion and profit per share was $5.66. However, the outlook does not include the acquisitions of MWM Holding GmbH or Bucyrus International because they have not yet closed.
“We expect that the pace of world economic growth will support continued recovery in the key industries we serve,” Oberhelman said. “Caterpillar, along with our global dealer network, is uniquely positioned to serve our customers, who are building the infrastructure and delivering the commodities necessary for a growing world economy. The continuing improvement in our outlook validates our strategy to aggressively invest in additional capacity for key products. We expect capital expenditures of about $3 billion in 2011 with more than half in the United States.”
Caterpillar Inc., Peoria, Ill., is a leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.
