Caterpillar keeps 2008 outlook of sales, revenue of $50 billion

Caterpillar is maintaining its full-year outlook for 2008. The company expects sales and revenues to top $50 billion, up from $44.958 billion in 2007, and profit per share of about $6.00 per share, up from $5.37 per share in 2007.

The Trucker News Services

10/21/2008

PEORIA, Ill.— Caterpillar Inc. today announced record third-quarter sales and revenue of $12.981 billion, 13 percent higher than third-quarter 2007 sales and revenue of $11.442 billion. Profit per share for the third-quarter 2008 was $1.39, down $0.01 from profit per share of $1.40 in the third quarter of 2007.

"We are pleased to have set a new third-quarter sales and revenues record, particularly considering the recessionary conditions in North America and growing weakness in Europe and Japan," said Chairman and CEO Jim Owens. "Demand in emerging markets and commodity prices at levels that encourage investment in mining and energy have helped offset negative economic conditions in much of the developed world," Owens added.

"Recent financial market turbulence has focused attention on the financial strength of businesses of all kinds," Owens said. "Caterpillar has a strong balance sheet, a solid credit rating and we've had access to the capital we need to run our business. That includes our captive finance company, Caterpillar Financial Services Corporation (Cat Financial). We are pleased to report that despite difficult market conditions, Cat Financial has had good access to capital and continues to offer lending options to our customers. It's a tough environment, but we have a conservative business model which prudently manages risk and a great team that's executing well at Cat Financial. When the dust settles, I'm confident that our customers and stockholders will be well served by Cat Financial's long-standing, sound lending practices," he said.

Sales and revenues of $12.981 billion increased $1.539 billion from the third quarter of last year, $833 million from sales volume, $385 million from improved price realization, $262 million from the effects of currency and $59 million from higher Financial Products revenues. The geographic mix of sales continued to shift outside North America with sales and revenues increasing 22 percent in other regions compared to 3 percent inside North America. Sales and revenues outside North America represent 60 percent of total sales and revenues in the third quarter -- up from 56 percent of the total one year ago.

Profit of $868 million was down $59 million from $927 million in the third quarter of 2007, a 6 percent decline, and profit per share was $1.39, a decrease of $0.01 from profit per share of $1.40 for the third quarter of 2007. The decrease was the result of higher manufacturing costs, primarily for materials.

"We expected that material and freight costs would increase in the second half of 2008, and they did in the third quarter. Higher material costs, especially for steel, were the most significant headwind we faced in the quarter," said Owens.

"The 2009 economic outlook is extremely uncertain at this time, with substantial turmoil in financial markets and unprecedented government intervention around the world," Owens said.

"Our current outlook for 2009 calls for sales and revenues to be about flat with our full-year 2008 results. In 2009 we expect pockets of strength in global mining, energy markets and in the area of emerging market infrastructure development to offset acute weakness in North America, Europe and Japan. Further, we are confident that our integrated service businesses, which have grown significantly this year, will offer revenue and earnings support in the coming year. That said, given the recent economic turmoil, we will issue our 2009 profit per share outlook with our year-end release in January.

“The world has experienced significant turbulence in financial markets, and we expect this will slow world economic growth over the next three or four quarters. While we are encouraged by the coordinated response by governments and central banks around the world and believe the actions they've taken will restore global liquidity, the depth and duration of economic decline and the timing and strength of the recovery are very uncertain.

“Caterpillar is prepared for volatility, and we remain very positive about our longer-term growth prospects. With our financial strength, global manufacturing and distribution network, our focus on the Caterpillar Production System powered by 6 Sigma and our diversified business portfolio, Caterpillar is poised to strengthen its global leadership position during this challenging period," Owens added.