As we approach MINExpo, we cannot help remembering the last event in 2008 when we went in with a boom in the mining industry, came out thinking how great the mining industry was and within a few days were hit by the start of the Global Financial Crisis. But Cat remains confident, with Chairman and Chief Executive Officer Doug Oberhelman saying “Caterpillar’s success in 2012 is occurring despite US construction activity that remains depressed and well below the prior peak, the problems facing Eurozone economies and economic concerns in China. While we’re expecting a record year in 2012, we understand the world is facing economic challenges, and if it becomes necessary, we are prepared to act quickly as we did in late 2008 and 2009. While we’re prepared, the good news is, this doesn’t feel like 2008. Interest rates are low, central banks are prepared to inject more liquidity if needed, and housing is coming off lows, not a peak, and seems to be improving.”
Caterpillar has announced a second-quarter 2012 profit per share of $2.54, an all-time quarterly record, and a 67% increase from second-quarter 2011 profit per share of $1.52. Sales and revenues were $17.374 billion, also an all-time record, and a 22% increase from second-quarter 2011 sales and revenues of $14.230 billion. Profit was $1.699 billion in the quarter, an increase of 67% from $1.015 billion in the second quarter of 2011.
“I am very pleased with Caterpillar’s record-breaking performance in the second quarter. Our employees, dealers and suppliers across the globe are doing a superb job of executing our strategy. They have helped deliver the highest level of financial performance for any quarter in our history for our stockholders and outstanding value for our customers,” said Oberhelman. “Our global footprint, the breadth of industries we serve and our extensive line of products and services have helped us achieve these record-breaking results during this time of heightened economic uncertainty, and execution has been outstanding. Whether you look at cost control, delivery performance, safety, quality, new product introductions or margin rates, Caterpillar’s operational performance in the quarter was excellent. It’s what drove second-quarter profit and is providing a solid foundation as we balance our positive long-term view of the world economy with the high level of uncertainty we’re all seeing today,” Oberhelman added.
For 2012, Cat has narrowed the outlook range for sales and revenues and raised the outlook for profit. “The sales and revenues outlook range for 2012 is now $68 to $70 billion with profit of about $9.60 per share at the middle of the sales and revenues outlook range. The previous outlook for sales and revenues was a range of $68 to $72 billion with profit of about $9.50 per share at the middle of the sales and revenues outlook range,” Oberhelman said.
“The adjustment to the high end of the sales and revenues outlook is a result of weaker economic conditions in much of the world and about $1 billion of negative currency impacts. Since the introduction of our outlook in January of 2012, the US dollar has strengthened and has negatively impacted our sales and revenues outlook as our sales in currencies other than the US dollar are translating into fewer U.S. dollars.”
The profit outlook improved as a result of better underlying operating performance, partially offset by the negative impact from an increase in estimated annual tax rate for 2012. Currency had little impact on the change in the profit-per-share outlook from $9.50 to $9.60 because of the offsetting impact on sales in the worldwide markets served with costs resulting from the extensive global manufacturing footprint and cost base. The outlook for 2012 reflects full-year records for sales and revenues and profit.
“While we will not hesitate to act if we need to, we believe that actions needed for better world economic growth for the future have already begun. Brazil started easing monetary policy with lower interest rates in late 2011, and we are now seeing improvement in our business there. China has started taking action, and we expect that further monetary easing and investment initiatives in China should help economic growth in late 2012 and 2013. In the US, we were pleased to see the passage of a transportation bill that provides our customers more clarity through fiscal 2014. We expect that with continued fiscal and monetary action the economies in Asia/Pacific, Latin America and North America can improve. It will likely take some time for the Eurozone to fix its problems, but we expect that monetary easing by the European Central Bank, a commitment to resolve debt issues and more focus on economic growth should help stabilise the situation and lead to better prospects in the future.
“I am cautiously optimistic about the world economy in 2013, very positive on the long-term prospects for global growth and excited about the role Caterpillar will play in making that growth happen. After all, the road to progress … begins with a road,” Oberhelman said.
