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Caterpillar Profits Improve While Sales Decline in Fourth Quarter

Jan. 31, 2020
Caterpillar posted sales and revenues for the fourth quarter of 2019 of $13.1 billion, compared to $14.3 billion for the fourth quarter of 2018, an 8.4-percent decrease.

Caterpillar posted sales and revenues for the fourth quarter of 2019 of $13.1 billion, compared to $14.3 billion for the fourth quarter of 2018, an 8.4-percent decrease. However, profit per share for Q419 was $1.97 compared with $1.78 for the fourth quarter of 2018. Adjusted profit per share in the fourth quarter of 2019 was $2.63, compared with $2.55 in Q418.

For the full year of 2019, sales and revenues were $53.8 billion, compared with $54.7 million in 2018, a 1.6-percent decline. Full-year 2019 profit was $10.74 per share, compared with $10.26 per share in 2018.

“In the fourth quarter, strong cost control more than offset lower-than-expected end-user demand,” said Jim Umpleby, Caterpillar chairman and CEO. “Our margin performance reflected our diligent focus on maintaining a flexible and competitive cost structure. While sales declined modestly in 2019, we delivered an operating margin and free cash flow consistent with our long-term targets and continued to invest in services and expanded offerings. The team’s focus on executing our strategy for profitable growth also allowed us to increase our dividend by 20 percent and return more than $6 billion in capital to shareholders through dividends and share repurchases.”

Operating profit margin was 14.1 percent for the fourth quarter of 2019, compared with 13.1 percent for the fourth quarter of 2018. Operating profit margin was 15.4 percent for full year 2019, compared with 15.2 percent for 2018.

Caterpillar expects 2020 profit to be in a range of $8.50 to $10 per share.

“We expect continued global economic uncertainty to pressure sales to users in 2020 and cause dealers to further reduce inventories,” said Umpleby. “We have improved our lead times and remain prepared to respond quickly to any positive or negative changes in customer demand. We will continue to invest in services and expanded offerings to advance our strategy for long-term profitable growth, while achieving our Investor Day targets.”

The fourth quarter revenue decline was caused by lower sales volume driven by the impact from changes in dealer inventories and lower end-user demand, primarily in Construction Industries and Resource Industries. Dealers decreased machine and engine inventories about $700 million during the fourth quarter of 2019, compared with an increase of about $200 million during the fourth quarter of 2018. Sales declined mainly in North America, along with decreases in Latin America and the EAME region. In North America, end-user demand was about flat.

Sales were higher in Latin America. While construction activities remained at low levels, the increase was driven by road and residential construction activities.