1st Quarter Results

RNS Number : 7304F

Caterpillar Inc

29 April 2011

 

Caterpillar Inc.

1Q 2011 Earnings Release

                                                                                                April 29, 2011                                       

FOR IMMEDIATE RELEASE

Caterpillar Reports Record Quarterly Profit;

Sales and Revenues Increase 57 Percent, Profit Up 426 Percent

Outlook raised for 2011 sales and revenues and profit

PEORIA, Ill.- Driven by the continuing improvement in global demand for its products and its focus on cost management, Caterpillar Inc. (NYSE: CAT) today reported first-quarter 2011 profit per share of $1.84-an all-time quarterly record and a 411-percent improvement from $0.36 in the first quarter of 2010.  First-quarter sales and revenues of $12.949 billion were up 57 percent from $8.238 billion in the first quarter of 2010.  Profit was a record $1.225 billion in the quarter, an increase of 426 percent from $233 million in the first quarter of 2010.

"I am very pleased with our first-quarter results-demand continued to improve, we increased production, cost control was excellent, and our operating profit margin improved.  We generated more than $1.6 billion of operating cash flow from our Machinery and Power Systems (M&PS) businesses, an increase of more than 50 percent, and our debt-to-capital ratio dropped more than 4 percentage points from year-end 2010," said Chairman and Chief Executive Officer Doug Oberhelman.  "We have the right strategy, and it's squarely focused on helping our customers win.  Our new organization is in place, is focused on execution and is getting the job done.  Given the scale of the volume ramp-up over the past year we also need to recognize the tremendous job that our suppliers and dealers have done to support us and our customers," added Oberhelman.

"While we posted great financial results for the quarter, we were saddened by the disaster that struck Japan following the earthquake and tsunami in early March.  Our thoughts and prayers are with the people in Japan who have been impacted by this disaster, including those at one Caterpillar dealer, where two employees perished in the tsunami.  I want to recognize and thank our employees in Japan, along with Caterpillar employees around the world, our suppliers and dealers as they have worked tirelessly to minimize the impact on our operations from the disaster," Oberhelman added.

First-quarter profit was $1.225 billion compared with a profit of $233 million in the first quarter of 2010.  The improvement in profit was primarily a result of significantly higher sales volume.  Price realization was favorable, but the impact was more than offset by higher manufacturing, selling, general and administrative (SG&A) and research and development (R&D) expenses.  In addition, $90 million of the improvement was due to the absence of a tax charge from the first quarter of 2010 related to enactment of U.S. health care legislation.

Outlook      

The outlook for 2011 has improved.  Sales and revenues are now expected to be in a range of $52 to $54 billion and profit in a range of $6.25 to $6.75 per share.  The previous 2011 outlook was for sales and revenues to exceed $50 billion and for profit to be near $6.00 per share.  The revised outlook reflects higher expected sales and revenues and higher profit per share than our previous record year of 2008 when sales and revenues were $51.3 billion and profit per share was $5.66.  However, the outlook does not include the acquisitions of MWM Holding GmbH (MWM) or Bucyrus International, Inc. (Bucyrus) because they have not yet closed.

While the 2011 outlook has improved, the increase would have been greater if not for the impact of the disaster in Japan.  Our facilities were not damaged by the earthquake and tsunami, but many of our suppliers in Japan were impacted.  As a result, we are experiencing sporadic production disruptions at many of our facilities around the world.  We expect the disruptions will have a negative impact on sales, factory efficiency and costs-particularly in the second quarter.  We are working hard to minimize the impact on our business, and while the situation has steadily improved in the aftermath of the disaster, it will likely have a negative impact on 2011 sales of about $300 million and negatively impact operating profit by about $100 million. 

"We are positive about the short-term U.S. economic outlook but believe bipartisan actions are needed in Washington to improve the long-run fiscal position of the U.S. government.  Instead of pointing fingers at each other, the Administration and members of Congress need to work hand in hand to find solutions that will position the U.S. economy for long-term strength.  Growing jobs and reducing unemployment would significantly reduce the deficit by increasing tax revenues, opening markets by approving free trade agreements would grow exports and support jobs, and adjustments to spending programs and the tax code would improve the long-term competitiveness of the economy," said Oberhelman.

"We expect that the pace of world economic growth will support continued recovery in the key industries we serve.  Caterpillar, along with our global dealer network, is uniquely positioned to serve our customers, who are building the infrastructure and delivering the commodities necessary for a growing world economy.  The continuing improvement in our outlook validates our strategy to aggressively invest in additional capacity for key products.  We expect capital expenditures of about $3 billion in 2011 with more than half in the United States," added Oberhelman.

"As I recently told investors at our analyst meeting at the ConExpo trade show in Las Vegas-we're on a roll and in a hurry.  We have a great strategy, and we're off to a good start, but we have room to improve and more to do to reach our goals for 2015," said Oberhelman.

Notes:

-       Glossary of terms is included on pages 18-19; first occurrence of terms shown in bold italics.

-       Information on non-GAAP financial measures is included on page 20.

For more than 85 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent.  With 2010 sales and revenues of $42.588 billion, Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.  The company also is a leading services provider through Caterpillar Financial Services, Caterpillar Remanufacturing Services, Caterpillar Logistics Services and Progress Rail Services.  More information is available at: http://www.caterpillar.com.

Caterpillar contact:  Jim Dugan, Corporate Public Affairs, [phone] (Office) or [phone] (Mobile)

FORWARD-LOOKING STATEMENTS

Certain statements in this release relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are subject to known and unknown factors that may cause Caterpillar's actual results to be different from those expressed or implied in the forward-looking statements.  Words such as "believe," "estimate," "will be," "will," "would," "expect," "anticipate," "plan," "project," "intend," "could," "should" or other similar words or expressions often identify forward-looking statements.  All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions.  These statements do not guarantee future performance, and Caterpillar does not undertake to update its forward-looking statements.

It is important to note that Caterpillar's actual results may differ materially from those described or implied in its forward-looking statements based on a number of factors, including, but not limited to: (i) global economic conditions and economic conditions in the industries and markets Caterpillar serves; (ii) government monetary or fiscal policies and government spending on infrastructure; (iii) commodity or component price increases and/or limited availability of raw materials and component products, including steel; (iv) Caterpillar's and its customers', dealers' and suppliers' ability to access and manage liquidity; (v) political and economic risks associated with our global operations, including changes in laws, regulations or government policies, currency restrictions, restrictions on repatriation of earnings, burdensome tariffs or quotas, national and international conflict, including terrorist acts and political and economic instability or civil unrest in the countries in which Caterpillar operates; (vi) Caterpillar's and Cat Financial's ability to maintain their respective credit ratings, material increases in either company's cost of borrowing or an inability of either company to access capital markets; (vii) financial condition and credit worthiness of Cat Financial's customers; (viii) inability to realize expected benefits from acquisitions and divestitures, including the acquisition of Bucyrus International, Inc.; (ix) the possibility that the acquisition by Caterpillar of Bucyrus International, Inc. does not close for any reason, including, but not limited to, a failure to obtain required regulatory approvals; (x) international trade and investment policies, such as import quotas, capital controls or tariffs; (xi) the possibility that Caterpillar's introduction of Tier 4 emissions compliant machines and engines is not successful; (xii) market acceptance of Caterpillar's products and services; (xiii) effects of changes in the competitive environment, which may include decreased market share, lack of acceptance of price increases, and/or negative changes to our geographic and product mix of sales; (xiv) union disputes or other employee relations issues; (xv) Caterpillar's ability to successfully implement the Caterpillar Production System or other productivity initiatives; (xvi) adverse changes in sourcing practices of our dealers or original equipment manufacturers; (xvii) compliance costs associated with environmental laws and regulations; (xviii) alleged or actual violations of trade or anti-corruption laws and regulations; (xix) additional tax expense or exposure; (xx) currency fluctuations, particularly increases and decreases in the U.S. dollar against other currencies; (xxi) failure of Caterpillar or Cat Financial to comply with financial covenants in their respective credit facilities; (xxii) increased funding obligations under our pension plans; (xxiii) significant legal proceedings, claims, lawsuits or investigations; (xxiv) imposition of operational restrictions or compliance requirements if carbon emissions legislation and/or regulations are adopted; (xxv) changes in accounting standards or adoption of new accounting standards; (xxvi) adverse effects of natural disasters; and (xxvii) other factors described in more detail under "Item 1A.  Risk Factors" in Part I of our Form 10-K filed with the SEC on February 22, 2011 for the year ended December 31, 2010.  This filing is available on our website at www.caterpillar.com/secfilings.

Click here to view Caterpillar Inc.'s complete 1^st Quarter 2011 financial results release issued April 29, 2011.

http://www.rns-pdf.londonstockexchange.com/rns/7304F_-2011-4-29.pdf

 

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