Caterpillar, Inc., a major player in the world’s construction equipment market, reported third-quarter profits up 96 percent, and sales and revenues up 53 percent over 2009.
In releasing their earnings report on Thursday, Caterpillar announced a third-quarter profit of $792 million as compared to third-quarter 2009 profit of $404 million. Sales and revenues were $11.134 billion as compared to $7.298 billion in the third quarter of 2009.
CEO Doug Oberhelman attributed much of the increase to growth in the developing world, with some improvement seen also in developed nations. Regarding developed nations he added: "While demand has increased, dealer new machine inventories and rental fleets have remained relatively flat, and the age of rental fleets hasn’t improved, and that should be positive for us as we move forward."
Revised Outlook for 2010
In its revised outlook for 2010, the company expects sales and revenues in the range of $41 to $42 billion, an increase of 28 percent from 2009 at the midpoint of the range. The previous outlook range was $39 to $42 billion.
The 2010 profit outlook is a range of $3.80 to $4.00 per share, an increase of 173 percent from 2009 at the midpoint of the range. The previous outlook range was $3.15 to $3.85 per share. "2010 is shaping up to be one of the most significant year-over-year increases in sales and revenues in our history," Oberhelman said.
The increase in earnings also meant an increase in workforce by the equipment giant. “So far this year, due to higher demand, we have increased our workforce by more than 15,000 people globally, including more than 6,000 full-time employees and 9,000 people added to our flexible workforce," Oberhlman noted. "I am pleased that we have put so many people back to work this year, and with continued global economic growth, we will add people in 2011 but remain keenly focused on cost control."
Preliminary Outlook for 2011
In its preliminary outlook for 2011, Caterpillar is expecting sales and revenues approaching $50 billion. "Developing economies are leading our growth in 2010, and we expect them to continue to grow in 2011. We are expecting developed countries to grow in 2011 as well, but at a slower pace than the developing world," Oberhelman said.
A cautionary note to U.S. policy makers
Oberhelman took the occasion to sound off about U.S. trade policy in Thursday’s release. "While we are expecting positive economic growth in the United States, the recovery is weaker than we’ve seen historically, particularly given the depth of the 2009 recession," he said. "To drive economic growth, we encourage government policy makers to advance pro-business initiatives and a growth agenda. In addition, they should avoid policy decisions that may create trade tensions between the United States and other key trading partners and avoid tax policy that puts U.S. multinationals, like Caterpillar, at a competitive disadvantage compared with non-U.S. competitors.”
Caterpillar signs agreement to acquire German alternative engine company
Following on the heels of its earnings report, Caterpillar Inc. announced that it had signed an agreement to acquire MWM Holding GmbH headquartered in Mannheim, Germany. MWM is a leading global supplier of highly sustainable alternative engines.
The total transaction value amounts to €580 million (approximately $810 million) and will be paid in cash. MWM, which stands for Motoren-Werke Mannheim, can draw on more than 135 years of experience in the development and optimization of combustion engines for natural gas, special gases and diesel.