Peoria, Ill.-based Caterpillar Inc. last week reported a third-quarter profit of $792 million, 96-percent higher than the third-quarter 2009 profit of $404 million. Profit per share was $1.22, an increase from $0.64 per share in the third quarter of 2009. Sales and revenues of $11.13 billion were up 53 percent from $7.30 billion in the third quarter of 2009.
"Third-quarter results continue to demonstrate our focus on aggressively managing costs and improving cash flow, while continuing to ramp up production to meet customer demand,” said Caterpillar CEO Doug Oberhelman. “Continuing economic growth in the developing world has been key to improving sales. In addition, sales in developed countries have improved substantially after deep declines in 2009. While demand has increased, dealer new machine inventories and rental fleets have remained relatively flat, and the age of rental fleets hasn't improved, and that should be positive for us as we move forward."
Sales and revenues were up $3.84 billion from the third quarter of 2009. Sales volume improved $3.71 billion, price realization was favorable $262 million, and currency had an unfavorable impact of $107 million. Financial Products revenues were down $33 million from the third quarter of 2009. Profit was up $388 million, with the increase primarily the result of higher sales volume, favorable price realization and improved manufacturing costs driven by the Caterpillar Production System, partially offset by higher taxes, incentive compensation and higher research and development expenses.
"As business continues to improve, we are investing in growth to support our customers and reward our stockholders,” Oberhelman added. “We serve industries with significant growth potential and are investing in our products, capacity and new businesses. We're updating our product line for Tier-4 emissions, we're expanding our mining products with shovels and electric-drive trucks, we're adding capacity around the world, and we're growing into new areas such as locomotives, with our acquisition of Electro-Motive Diesel."
The outlook for 2010 sales and revenues is a range of $41 to $42 billion, an increase of 28 percent from 2009 at the midpoint of the range. The previous outlook range was $39 to $42 billion. The 2010 profit outlook is a range of $3.80 to $4.00 per share, an increase of 173 percent from 2009 at the midpoint of the range. 2010 is shaping up to be one of the most significant year-over-year increases in sales and revenues in Caterpillar’s 85-year history.
The company’s preliminary outlook for 2011 reflects sales and revenues approaching $50 billion led by developing economies.
"So far this year, due to higher demand, we have increased our workforce by more than 15,000 people globally, including more than 6,000 full-time employees and 9,000 people added to our flexible workforce,” Oberhelman said. “While we are expecting positive economic growth in the United States, the recovery is weaker than we've seen historically, particularly given the depth of the 2009 recession. To drive economic growth, we encourage government policy makers to advance pro-business initiatives and a growth agenda. In addition, they should avoid policy decisions that may create trade tensions between the United States and other key trading partners and avoid tax policy that puts U.S. multinationals, like Caterpillar, at a competitive disadvantage compared with non-U.S. competitors."
Cat Financial reported third-quarter revenues of $640 million, a decrease of $36 million, or 5 percent, compared with the third quarter of 2009. Third-quarter profit after tax was $73 million, a $3 million decrease from the third quarter of 2009.
The decrease in revenues was principally due to a $46 million impact from lower earning assets (finance receivables and operating leases at constant interest rates) and a $13 million unfavorable impact from lower interest rates on new and existing finance receivables, partially offset by a $24 million favorable change from returned or repossessed equipment.
New retail financing was $2.5 billion, an increase of $706 million, or 40 percent, from the third quarter of 2009. The increase was primarily related to improvement in the company’s North America, Europe and Asia-Pacific operating segments.
At the end of the third quarter of 2010, past dues were 4.88 percent, down from 5.33 percent at the end of the second quarter and 5.54 percent at the end of 2009. At the end of the third quarter of 2009, past dues were 5.79 percent. The reduction in past dues from year-end is primarily due to the general improvement in global economic conditions.
Caterpillar is a leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. Cat Financial, a wholly-owned subsidiary of Caterpillar Inc., provides a wide range of financing alternatives to customers and Caterpillar dealers for Caterpillar machinery and engines, Solar gas turbines and other equipment and marine vessels. Cat Financial has offices and subsidiaries located throughout the Americas, Asia, Australia and Europe, with headquarters in Nashville, Tenn.
