Peoria, Illinois – Caterpillar Inc. earned slightly more than $1 billion in the third quarter, up from $950 million a year ago as strong sales of construction and oil and gas equipment offset losses in mining.
“We’re pleased with the third-quarter profit improvement considering world economic growth remains slower than we’d like. We’ve continued to focus on what we can control — cost management and operational execution,” said Caterpillar Chairman and CEO Doug Oberhelman. “We’re making progress and it is beginning to be reflected in our results. The diversity of the businesses we’re in and the strengthening of our operational performance have been key to helping us improve results and our competitive position in this weak economic recovery.”
The company now expects 2014 sales and revenues to be about $55 billion, the middle of the previous outlook range of $54 to $56 billion. While the mid-point of the sales and revenues outlook range has not changed, profit per share expectations for 2014 continue to improve.
“In January we provided our first profit outlook for 2014 at $5.85 per share excluding restructuring costs — our current outlook excluding restructuring costs is $6.50 per share, a substantial improvement,” Oberhelman said. “As we move into the final quarter of 2014, we expect to build on what we’ve been working on: strategy execution, operational performance, cost management, cash flow, our healthy balance sheet and improving our market position.”
He added that there is a reasonable likelihood that world economic growth could improve in 2015. In developed countries, growth-oriented monetary policies should support continued modest economic improvement. In addition, Caterpillar’s management believes there is potential for increased investment in infrastructure in countries such as the United States, India, and Turkey.
In developing countries, several governments raised interest rates or constrained liquidity in 2013 to control inflation or protect their exchange rates, and these measures have led to slower growth in 2014. More recently, interest rates in many developing countries have stabilized, and Caterpillar officials say they saw the first monetary policy easing in the third quarter of 2014.
Despite cautious optimism for improved global economic growth, significant risks and uncertainties remain that could temper growth in 2015. Political conflicts and social unrest continue to disrupt economic activity in several regions, in particular, Russia, Africa, and the Middle East. The Chinese government’s push for structural reform is slowing growth, and the ongoing uncertainty around the direction and timing of U.S. fiscal and monetary policy actions may temper business confidence. As a result, Caterpillar’s preliminary outlook for 2015 expects sales and revenues to be flat to slightly up from 2014.
“At this point, our view of 2015 sales and revenues isn’t significantly different than 2014. Our order backlog was up a little in the third quarter and was slightly higher than at this point last year. We’re hopeful that economic growth will improve in 2015, but are mindful of the uncertainties and risks,” Oberhelman added.
Source: Caterpillar