Caterpillar on Track to Break Sales Slump -- Update
24 Oktober 2017 - 5:22PM
Dow Jones News
By Bob Tita and Austen Hufford
Caterpillar Inc. raised its sales and profit forecast for the
year amid rising demand for construction and mining equipment,
partly helped by an improving energy industry.
The Caterpillar, the world's largest producer of bulldozers,
excavators and other earth-moving machinery, saw widespread
improvement in sales during the third quarter.
The Deerfield, Ill.-based manufacturer said its dealers stepped
up their purchases of equipment to restock depleted inventories in
response to rising customer demand, especially from an improving
oil and gas industry in North America. Construction-equipment sales
in the region grew 31% from last year and mining-equipment sales
increased by 28%.
Caterpillar's fortunes have improved over the past year
following a years-long slump from a downturn in the global
commodities markets and slowdown in construction.
The company's stock has risen more than 50% over the past 12
months, and recently added 5.4% to $139.74.
But slow-growing economies around the world, the absence of a
major infrastructure spending plan in the U.S. and a still-fragile
mining sector threaten to undermine the prolonged upturn in
machinery demand that company executives and investors have been
expecting.
Jim Umpleby, who took over as chief executive on Jan. 1, said a
prime focus under his watch would be profitable growth, rather than
only increasing revenue and market share, with a focus on parts and
services. The third-quarter operating margin on machinery was 14%,
up from 7.8% a year ago, reflecting the company's emphasis on
profit expansion.
"Higher sales volume and our team's focus on cost discipline
resulted in improved profit margins across" the company, Mr.
Umpleby said.
Caterpillar, which had in years past released guidance for the
following year during its third quarter, didn't provide that
Tuesday, citing its new enterprise strategy.
The manufacturer also said it would raise prices early next year
through a new structural change to its machine pricing: List prices
will fall but the company will cut merchandising discounts, even
more, leading to higher prices.
Caterpillar's full-time workforce decreased to 96,700 employees
at the end of the third quarter, down from 97,100 the prior year,
amid layoffs and some factory closures.
Overall, profit from the quarter ended Sept. 30 was $1.05
billion, or $1.77 a share, up from $283 million, or 48 cents a
share, last year. Wall Street analysts had expected per-share
earnings of $1.11.
Caterpillar said revenue, including from its financing business,
rose 25% to $11.5 billion.
The company now expects full-year revenue to come in at about
$44 billion, up from its forecast in July of $43 billion. It now
expects per-share profit of $4.60, up from $3.50 earlier.
Write to Bob Tita at robert.tita@wsj.com and Austen Hufford at
austen.hufford@wsj.com
(END) Dow Jones Newswires
October 24, 2017 11:07 ET (15:07 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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