Tags: Caterpillar | manufacturing | construction | earnings

Caterpillar Raises Outlook After Profit Beats View

Thursday, 23 October 2014 08:07 AM

Caterpillar Inc. shares jumped more than 6 percent in premarket trading after the company reported a stronger-than-expected quarterly profit and boosted its 2014 profit outlook, citing strong demand for its products in North America.

Excluding restructuring costs, Caterpillar said it now expects to earn $6.50 a share in 2014, against an original estimate of $5.85.

The company, the world's largest maker of earth-moving equipment, said earnings growth came on robust demand from the construction and oil and gas industries in North America, which offset continued weak demand from the global mining industry.

Looking toward 2015, the company said there was “a reasonable likelihood that world economic growth could improve.”

But it warned a number of “significant risks” – including tensions in the former Soviet Union and the Middle East, slowing growth in China and rising interest rates in many countries – could drag down business confidence and weigh on its sales.

As a result, Caterpillar said revenue was expected to be essentially unchanged in 2015.

Still, Lawrence De Maria, an analyst at William Blair & Co., said that didn't worry him.

“Caterpillar is being cautiously optimistic, which is really all they can be given all the gremlins out there,” De Maria said. “But even with revenue flat, they’ve shown they can deliver solid (earnings per share) growth.”

For the third quarter ended Sept. 30, Caterpillar earned a net profit of $1.1 billion, or $1.63 a share, up from $946 million, or $1.45 a share, a year earlier.

Analysts, on average, expected Caterpillar to earn $1.36 a share on sales of $13.2 billion, according to Thomson Reuters I/B/E/S.

Sales and revenue from financial services rose 1 percent to $13.54 billion.

Sales jumped 15 percent in North America, thanks to demand from the energy and construction industries. But those gains were offset by a 21 percent sales decline in Latin America, a 7 percent decline in sales in most of the Asia-Pacific region, and flat sales in China, Europe, the Middle East and Africa.

Eli Lustgarten, an analyst at Longbow Research, called the results a "clean beat driven by strong volumes and margins and operating efficiencies."

In premarket trading, Caterpillar shares were last up more than 3 percent at $97.75, after earlier soaring more than 6 percent. The stock closed Wednesday at $94.57.

© 2019 Thomson/Reuters. All rights reserved.

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US industrial giant Caterpillar reported Thursday sharply improved earnings for the third quarter despite slower global economic growth.
Caterpillar, manufacturing, construction, earnings
Thursday, 23 October 2014 08:07 AM
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