Caterpillar ups outlook on record results
By Chris Sleight22 July 2008
Caterpillar had its best second quarter ever this year, with sales up +20% to US$ 13.6 billion for April, May and June. It made a post-tax profit of US$ 1.11 billion for the quarter, a +34% increase on the same period in 2007.
The better than expected performance has led the company to increase its revenue outlook for the year to US$ 50 billion, up from the previous estimate of US$ 47.2 to US$ 49.5 billion. It expects profits per share of about US$ 6.00, towards the upper end of the previous US$ 5.64 to US$ 6.18 estimate.
Commenting on the results, Caterpillar chairman & CEO Jim Owens said, "Never in my 35-plus years with the company have I seen Caterpillar do so well in the face of such a difficult economic climate in the US. We are on track to deliver our fifth straight year of record profits despite very tough conditions in the US, declines in Europe and significantly higher material costs, particularly in the second half of the year."
Emerging market growth
The strongest growth for Caterpillar in the second quarter of the year came from Asia, where its revenues were up +52% compared to Q2 2007, to US$ 2.24 billion. The company singled out the Chinese and Indian construction markets as well as the Indonesian mining sector as key growth drivers.
Sales growth was also strong in Latin America, with revenues up +27% to US$ 1.47 billion, with Brazil, Chile, Colombia and Mexico leading the way.
In the Europe, Africa & Middle East (EAME) region sales were up +22% to US$ 4.44 billion. Caterpillar said that although construction weakened - particularly the residential sector in the UK, Ireland and Germany - oil producing countries in Africa and the Middle East and particularly major mining markets in Russia and the CIS more than compensated.
Caterpillar's home market of the US saw the most modest growth, with revenues rising just +7% to US$ 5.48 billion. The company painted a particularly grim picture for the residential sector, saying ain a statement, "US housing faced the worst environment since the 1930s. Starts fell -30% from a year earlier, new home sales plunged more than -40% and homebuilders held an almost 11-month supply of new homes."
However, it said that higher machinery sales to the coal, oil and gas sectors helped grow sales in the region.