April 24, 2014
PEORIA, Ill. — Caterpillar Inc. (NYSE: CAT) today reported first-quarter 2014 profit per share of $1.44, an increase from profit per share of $1.31 in the first quarter of 2013. The first quarter of 2014 included a negative impact of $0.17 per share for previously announced restructuring activities. Excluding restructuring costs, profit per share was $1.61. First-quarter 2014 sales and revenues were $13.241 billion, about flat with the first quarter of 2013 sales and revenues of $13.210 billion.
“Given the business and economic uncertainties around the world and continuing decline in our mining sales, I am pleased with our performance in the first quarter. We understand we don’t control the economy and have instead focused on what we can improve. We’re lowering costs, improving cash flow and driving value for our customers through the continued deployment of our lean manufacturing initiatives. We see the benefits of these actions in our first-quarter results and in improving market position for many of our products,” said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman.
“This was a quarter that clearly highlighted the diversity of Caterpillar’s business across industries and regions of the world, and how that diversity continues to help us through the downturn in mining. Both Energy & Transportation and Construction Industries had good results in the first quarter and performed at levels better than we anticipated,” Oberhelman added.
The company’s outlook for sales and revenues remains unchanged at $56 billion in a range of plus or minus 5 percent. However, there are a range of macro-economic and geo-political uncertainties that could slow the growth of global GDP and impact the sales of Caterpillar’s products in 2014. These potential events are a concern, and the company will monitor them closely and take actions to respond if needed. While the sales and revenues outlook range remains unchanged, the company is increasing its 2014 profit outlook by $0.25 per share. To provide a better understanding of the company’s expectations for 2014 profit, Caterpillar is providing its outlook with and without anticipated restructuring costs. The company continues to anticipate restructuring costs of about $0.55 per share. With sales and revenues at $56 billion, the revised profit outlook for 2014, including restructuring costs of $0.55 per share, is $5.55 per share — higher than the previous outlook of $5.30 per share. Excluding restructuring costs, the revised profit outlook is $6.10 per share, up from the previous outlook of $5.85 per share.
While the outlook for sales and revenues remains unchanged overall, the company’s expectations for Construction Industries have improved, and expectations for Resource Industries have declined. Caterpillar now expects Construction Industries’ sales will increase about 10 percent from 2013 — the previous expectation was an increase of about 5 percent. Caterpillar expects sales for Energy & Transportation to increase about 5 percent from 2013, which has not changed from the previous outlook. Despite prospects for improved economic growth and continued strong mine production in 2014, the company expects Resource Industries’ sales to be lower than previously anticipated. Resource Industries’ sales are now expected to be down about 20 percent from 2013. The previous outlook expected a decline of about 10 percent. The decline in expectations is a result of continued low order rates for mining equipment. The company expects mining orders will begin to improve at some point, but not likely in time to increase Resource Industries’ sales in 2014. While the outlook reflects continued short-term weakness in Caterpillar’s mining-related sales, the company remains positive on the long-term prospects for the mining industry.
“The change in our profit outlook is a result of our very solid performance in the first quarter, while also recognizing the uncertainty we are facing in a number of areas of our business and the continued risk that geo-political events could negatively impact global GDP growth,” Oberhelman said. “China is one example of both the potential and uncertainty we face. During my visit a few weeks ago, it was evident the Chinese construction industry is facing challenges; however, I was pleased with how Caterpillar is performing compared to our competitors. I came away optimistic about how we are executing our China strategy as we implement our proven business model along with our dealers and suppliers who continue to invest in China. At the same time, Chinese leaders are in the midst of transitioning the world’s second largest economy to a longer-term, more sustainable growth model while maintaining social stability. This is an enormous task that carries risks for the world economy. In addition, we are very concerned about the situation in Ukraine and Russia. We are hoping for a peaceful resolution, but business confidence around the world could dampen, and trade and world GDP could slow should the situation deteriorate. The global economy remains fragile, and as such, one or two setbacks could create substantial downside risk for the global economic recovery.
“In numerous recent discussions with construction customers and our dealers in the United States, I continue to hear positive stories about new projects and reasons for optimism. While that’s encouraging, there’s still quite a bit of room for improvement. The U.S. construction industry is still well below its 2006 peak, and we have a real need for infrastructure improvement,” Oberhelman said.
“With the modest improvement in the global economy, we are expecting to deliver better sales and profit this year in Construction Industries, and Energy & Transportation appears to be on track for another solid year. However, 2014 is shaping up to be another very tough year for mining. In fact, today’s outlook reflects a drop of about 80 percent in sales of large mining trucks from our peak year of 2012,” Oberhelman added.
The company made several changes in its organizational structure in the first quarter. The changes are reflected in the segment reporting in this financial release, and first-quarter 2013 comparisons have been reclassified to reflect the changes. See question seven on page 17 for more information.
Worldwide full-time employment was 116,579 at the end of the first quarter of 2014 compared with 124,874 at the end of the first quarter of 2013, a decrease of 8,295 full-time employees. The flexible workforce decreased 955 for a total decrease in the global workforce of 9,250.
The decrease was primarily the result of 2013 restructuring programs. The remaining decrease was primarily due to aligning the workforce with production volumes.
Click here to download the full version of the Caterpillar Inc.1Q 2014 results release.
Caterpillar contact: Jim Dugan, (309) 494-4100 (Office) or (309) 360-7311 (Mobile)