Caterpillar reports record Q1

By Helen Wright03 May 2011

Caterpillar

Caterpillar

Caterpillar reported record first quarter profit of US$ 1.2 billion, an increase of +426% compared to the first three months of 2010, as sales during the period jumped +57% year-on-year to US$ 12.9 billion.

Caterpillar said the surge in sales was a result of continued economic growth and recovery from the low levels demand for equipment experienced in the first quarter of 2010. Machinery and power systems sales increased +63% year-on-year US$ 12.3 billion, reflecting higher demand from end users and dealers adding to their inventories during the period.

On the back of the positive results, the company improved its full-year sales outlook to between US$ 52 billion and US$ 54 billion (compared to the previous forecast of over US$ 50 billion). Profit for 2011 is also expected to be in a range between US$ 6.25 and US% 6.75 per share, compared to the previous forecast of around US$ 6.00 per share.

This forecast is higher than Caterpillar's previous record year of 2008, when sales were US$ 51.3 billion and profit was US$ 5.66 per share.

However, the company said its 2011 outlook would have been even better if it had not been for the disaster in Japan. The 11 March earthquake and tsunami affected many of Caterpillar's suppliers in the country, and the company said it was experiencing "sporadic production distruptions" at many of its facilities around the world.

"We expect the disruptions will have a negative impact on sales, factory efficiency and costs particularly in the second quarter," the company said, adding that it expects to lose US$ 300 million in sales during 2011 as a result of the disaster, while full-year operating profit would be around US$ 100 million lower.

Meanwhile, Caterpillar chairman and CEO Doug Oberhelman said the company would continue to invest during the year. "The continuing improvement in our outlook validates our strategy to aggressively invest in additional capacity for key products. We expect capital expenditures of about US$ 3 billion in 2011 with more than half in the US," he said.

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