Caterpillar Sales Jump on Strong International Demand
24 April 2018 - 3:52PM
Dow Jones News
By Andrew Tangel
Caterpillar Inc.'s sales jumped 31% in the first quarter as the
heavy machinery giant reported continued strength in construction
and mining markets around the world.
The Deerfield, Ill.-based maker of bulldozers, mining trucks and
other equipment boosted its profit outlook for the year, saying it
could earn as much as $10.75 a share in 2018, $2 more than the
upper end of its previous forecast.
Revenue of $12.9 billion in the quarter was lifted in part by a
stronger euro and Chinese yuan. Some of the foreign-exchange gains
were offset by higher manufacturing costs, primarily due to the
price of steel. Manufacturers say steel costs have risen since the
Trump administration in March placed duties on imports from many
foreign countries.
"The combination of strength in many of our end markets and our
team's continued focus on operational excellence, including strong
cost control, helped us deliver improved margins and a record
first-quarter profit," Chief Executive Jim Umpleby said.
Caterpillar warned, though, that trade disputes could darken the
outlook for the rest of the year. Officials in both China and the
U.S. are threatening each other with additional trade barriers.
"Any potential impacts from future geopolitical risks and
increased trade restrictions have not been included in the
outlook," the company said.
Caterpillar's shares rose 4% in pre-market trading. The
company's annual revenue jumped 18% in 2017 following a string of
consecutive yearly declines.
Sales growth in North America was Caterpillar's biggest driver
in the quarter. Dealers boosted inventories as demand for
construction equipment increased, primarily due to public works and
energy infrastructure such as pipelines.
Increased building construction and spending on infrastructure
in China drove sales in its Asia/Pacific region. Sales in Latin
America rose even though construction activity there remained
weak.
Mining companies increasingly replaced equipment and expanded
their fleets as commodity prices remained strong.
Overall for the first quarter the company reported a profit of
$1.67 billion, or $2.74 a share, up from $192 million, or 32 cents
a share a year earlier. On an adjusted basis, earnings more than
doubled to $2.82 a share.
Last year's results were dented by $723 million in restructuring
costs primarily related to a facility closure. Restructuring costs
in the most recent quarter were $69 million.
Analysts polled by Thomson Reuters had forecast earnings of
$2.13 a share on $12.07 billion in sales.
The company's domestic workforce stood at 51,500 employees at
the end of March, up from 46,500 a year ago.
Imani Moise contributed to this article
Write to Andrew Tangel at Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
April 24, 2018 09:37 ET (13:37 GMT)
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