Caterpillar Boosts Outlook as Revenue Jumps -- Update
July 25 2017 - 9:04AM
Dow Jones News
By Andrew Tangel and Austen Hufford
Caterpillar Inc. boosted its revenue and outlook for the year as
sales for its bulldozers, excavators and other equipment grew in
many of its construction markets around the world.
The heavy machinery giant said Tuesday it expects revenue of $42
billion to $44 billion for all of 2017, up from a previous forecast
of as much as $41 billion. Caterpillar took in $38.5 billion in
revenue last year, its fourth-straight year of declining sales.
Caterpillar said its second-quarter revenue jumped 10% to $11.3
billion from the prior year, fueled by Chinese demand for equipment
for infrastructure projects and residential construction, as well
as the market for equipment in the North American natural gas
industry.
Shares rose about 5% in premarket trading to $113.24.
"While a number of our end markets remain challenged,
construction in China and gas compression in North America were
highlights in the quarter," Caterpillar Chief Executive Jim Umpleby
said. "Mining and oil-related activities have come off recent lows,
and we are seeing improving demand for construction in most
regions."
Demand for construction equipment in North America, its largest
market, rose 3% in the quarter, but decreased 5% in Europe, the
Middle East and Africa. Sales of construction equipment in Latin
America rose 31% as several countries' economies showed signs of
improvement.
Caterpillar cautioned, however, that it sees remaining weakness
in the Middle East and Latin America, as well as geopolitical
uncertainty and commodity-price volatility.
Caterpillar saw signs of turnaround in some of its markets in
the first quarter. That trend continued in the months since as
retail sales of Caterpillar machinery increased 7% world-wide
during the three months to the end of June.
Signs of recovery comes after four straight years of revenue
decline and waves of layoffs for Caterpillar, which is moving its
headquarters to the Chicago suburb of Deerfield from Peoria,
Ill.
The company has been working to trim its workforce and shrink
its global manufacturing footprint. Caterpillar said it now expects
restructuring costs of about $1.2 billion for the year, down from
the previously expected $1.25 billion. Caterpillar's full-time
workforce declined to 94,800 employees at the end of the second
quarter, down from 100,000 the prior year.
In recent months, public attention has focused on a federal
investigation involving Caterpillar's taxes, a Swiss subsidiary and
export filings.
The Wall Street Journal reported earlier this month
investigators believe Caterpillar failed to submit numerous
required export filings with the federal government in recent
years. Caterpillar has said it believes its tax position is
correct, and that the company was in the process of "responding to
the government's concerns."
Overall for the second quarter, Caterpillar reported a profit of
$802 million, or $1.35 a share, compared with $550 million, or 93
cents a share a year ago.
Excluding restructuring costs, the company said it earned $1.49
a share, compared with $1.09 a year ago.
Analysts polled by Thomson Reuters had expected $1.26 in
adjusted earnings per share on revenue of $10.93 billion.
Write to Andrew Tangel at Andrew.Tangel@wsj.com and Austen
Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
July 25, 2017 09:49 ET (13:49 GMT)
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