Continuing to meet strong customer demand worldwide, Caterpillar Inc. reported third-quarter sales and revenues of $8.977 billion and profit of $667 million, or 94 cents per share. Both sales and revenues and profit per share are the highest in the company’s history for a third quarter.
“Thanks to the hard work of our people around the world and the discipline of 6 Sigma, Team Caterpillar has again effectively responded to our customers’ needs,” said Caterpillar Chairman and CEO Jim Owens. “We met the challenges stemming from recent hurricanes with minimum disruption to our business and maximum responsiveness to the cleanup needs in the Gulf region and delivered the best third-quarter financial results in company history.”
Sales and revenues of $8.977 billion were up $1.318 billion, or 17 percent, compared to $7.659 billion for the third quarter of 2004. The higher sales and revenues were driven by continued strong global demand and improved price realization.
Profit of $667 million, or 94 cents a share, was up 34 percent compared to profit of $498 million in the third quarter of 2004. Machinery and Engines operating profit as a percent of sales increased substantially—7.9 percent in the third quarter of 2004 to 10.5 percent in the third quarter of 2005. The increase was the result of improved price realization, higher sales volume, and effective management of the price cost structure, somewhat offset by continued pressure on variable manufacturing costs.
“While we posted the best third quarter in our history, we still have opportunity to improve our operations. In particular, we have to work through capacity bottlenecks and need more focus on production processes to improve order fulfillment and supply chain efficiencies. To help move us faster along this path, we announced a new division to drive improvements in our production process and order fulfillment capability,” said Owens.
The outlook for 2005 has been revised from previously reported levels. Sales and revenues are now expected to be up about 20 percent from 2004, and the profit outlook has been adjusted to reflect an estimated profit range of $3.85 to $4 per share. The previous outlook reflected sales and revenues up 18 to 20 percent and profit per share of $4 to $4.20.
Cat Financial
Caterpillar Financial Services Corporation (Cat Financial) reported record revenues of $596 million, an increase of $120 million, or 25 percent, compared with third quarter 2004. Profit after tax was a third-quarter record $87 million, a $5 million or 6 percent increase over third quarter 2004.
Of the increase in revenues, $71 million resulted from the impact of continued growth of finance receiveables and operating leases (Earning assets) and $44 million from the impact of higher interest rates on new and existing finance receiveables.
On a pre-tax basis, profit was up $17 million, principally due to $36 million from growth in earning assets and a $5 million favorable change in currency exchange gain/loss, partially offset by $12 million from higher operating expenses, a $7 million write-down of a repossessed marine vessel, and a $7 million write-off of investment-related income.
New retail financing was a third-quarter record $3.02 billion, an increase of $631 million or 26 percent from the same period one year ago. The increase was the result of increased financing in all segments.
Caterpillar Vice President and Cat Financial President Kent Adams said, “We had an excellent quarter with record revenues and the second highest quarter ever for both profit and new retail financing. The portfolio continues to perform very well. The combined efforts of the Caterpillar Dealers and our employees continue to provide our customers great value that results in continued strong growth.” IBI
