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Despite patchy fourth quarter results, Caterpillar performed strongly in the 2012 financial year.
Despite patchy fourth quarter results, Caterpillar performed strongly in the 2012 financial year.
 










Reductions lead Cat back into the black

Caterpillar has announced record 2012 sales despite continuing economic and political uncertainty in the United States, continued economic turmoil in much of Europe and slower growth in China.
The company has reported revenues of $US65.8 billion, an increase of 10 per cent from $60.1 billion in 2011.

Its profit was $US5.6 billion, an increase of 15 per cent from US$4.9 billion in 2011.

However, revenue analysts remain unimpressed with Caterpillar’s 2012 profit, especially after accounting fraud and write-downs hit its bottom line.

The company also closed out 2012 poorly, with its fourth quarter net profit down to $US669 million, compared with $US1.5 billion at the same time in 2011.

“From an operational standpoint, 2012 was a very successful year with record sales and profit in a tough economic climate,” said Caterpillar chairman and chief executive officer Doug Oberhelman. “Considering the weak economy in the United States, along with much of Europe in recession and China slowing, we had a solid year.

“Our incremental operating profit pull through was very good, we made progress adjusting inventory levels, and our quality and safety indicators continued to improve.

“I'm extremely pleased with our performance on reducing inventory by $2 billion in the fourth quarter. As the world economy began to soften at mid-year, we increased our focus on reducing inventory.

“Cat dealers also worked to lower their inventories, and, as a result, reduced their order rates during the second half of 2012. The result was a substantial reduction in our production levels and inventory.

“The reductions had a significantly negative impact on fourth-quarter sales and profit. The $2 billion inventory reduction in the fourth quarter was a remarkable effort, but we're not done.

“Reduced production levels are likely to continue at least through the first quarter of 2013 until inventories and dealer order rates move back in line with end-user demand,” Oberhelman said.

The outlook for 2013 is sales and revenues in a range of $US60 to $US68 billion.

“The range of our 2013 outlook reflects the level of uncertainty we see in the world today,” Oberhelman explained. “We're encouraged by recent improvements in economic indicators, but remain cautious.

“While we expect some improvement in the US economy, growth is expected to be relatively weak. We believe China's economy will continue to improve, but not to the growth rates of 2010 and 2011.

“We also remain concerned about Europe and expect economies in that region will continue to struggle in 2013," he predicted.

“If the recent improvement in economic indicators continues, 2013 could be another record year for Caterpillar.

“We expect the first half of 2013 will be weaker than the first half of 2012, with better growth in the second half. However, if, like the last two years, growth and confidence decline in the second half, 2013 could be a tough year.

“Either way, as we demonstrated with inventory reductions in the fourth quarter, our team is prepared to execute and deliver,” Oberhelman concluded.

Sources: Caterpillar, Manufacturer’s Monthly









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