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Released July 25, 2014 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Heavy machinery manufacturer Caterpillar Incorporated (NYSE:CAT) (Peoria, Illinois) reported solid profit gains for second-quarter 2014, despite a drop in revenues, as a strengthening U.S. construction market and tighter cost controls helped the company offset a continuing decline in its global mining business. Caterpillar reported $999 million in profits, a 4.06% increase from second-quarter 2013.
Industrial Info is tracking $95 million in active projects involving Caterpillar, including the $41.5 million addition of a 30-megawatt (MW) diesel generator at Tabuk Cement Company's facility in Tabuk, Saudi Arabia. Caterpillar is serving as the technology provider for the project, which involves installing for 7.5-MW Caterpillar diesel generator sets to meet the power requirements for the plant's upcoming expansion. The generator addition is expected to be completed in the first quarter of 2015.
View Plant Profile - 3034794
View Project Report - 300122212 300043363
Total sales and revenues stood at $14.15 billion, a 3.22% decrease from second-quarter 2013. Most of the decline was attributed to the Resource Industries segment, where sales were lower in all geographic regions. End-users in the Metals and Minerals Industry reduced spending globally, as they chose to invest further in production at existing mines rather than expand or build new ones. As a result, new orders for Caterpillar's mining products remained low.
"This was the first quarter since 2012 that Resource Industry sales were higher than the previous quarter," said Mike DeWalt, the vice president of strategic services for Caterpillar, in a conference call. "So that means second-quarter 2014 sales were about 6% higher than the first quarter. Sales improved from first to second for new equipment and for parts. In fact, for parts, it's the second consecutive quarterly improvement."
He added: "Now, it's too soon to suggest that the mining business in turning around, but it's good to see sequential improvement."
Nonetheless, the Construction Industries segment benefited from much stronger sales in North America due to lower inventory shedding from dealers and stronger end-user demand. Continuing improvement in the U.S. construction market is brightening the outlook for this segment and Caterpillar as a whole. Favorable price realization led to record profits in the Energy & Transportation segment, despite a dip in North American power-generation sales.
Capital expenditures for the first six months of 2014, excluding equipment leased to others, were reported to be $710 million, compared with $1.39 billion at the same point in 2013. Manufacturing costs declined after cost discipline and absorption measures were widely adopted; inventory remained mostly flat during the quarter, compared with a sharp decrease in inventory in the same period last year.
Caterpillar executives remain optimistic in their full-year outlook, although slower construction in China and myriad political crises in the Middle East are forcing a cautious stance. Expectations for sales and revenues were narrowed to between $53 billion and $56 billion; the midpoint is a notch lower, as construction-related sales in these places are expected to decline. Still, Caterpillar executives believe that continued economic improvement in developed countries will boost demand for mined commodities and energy sources.
"There's typically seasonality in our sales, and we think that's going to be the case this year, as well," DeWalt said in the conference call. "We basically have the second half of the year as not a lot different from the first half. Now we expect sales and revenues in the third quarter to be similar to sales and revenues in the first quarter of 2014, and fourth quarter sales to be more in line with the second quarter of 2014."
Sales and revenues for the first quarter of 2014 were reported in the previous quarterly statement to be $13.24 billion.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Industrial Info is tracking $95 million in active projects involving Caterpillar, including the $41.5 million addition of a 30-megawatt (MW) diesel generator at Tabuk Cement Company's facility in Tabuk, Saudi Arabia. Caterpillar is serving as the technology provider for the project, which involves installing for 7.5-MW Caterpillar diesel generator sets to meet the power requirements for the plant's upcoming expansion. The generator addition is expected to be completed in the first quarter of 2015.
View Plant Profile - 3034794
View Project Report - 300122212 300043363
Total sales and revenues stood at $14.15 billion, a 3.22% decrease from second-quarter 2013. Most of the decline was attributed to the Resource Industries segment, where sales were lower in all geographic regions. End-users in the Metals and Minerals Industry reduced spending globally, as they chose to invest further in production at existing mines rather than expand or build new ones. As a result, new orders for Caterpillar's mining products remained low.
"This was the first quarter since 2012 that Resource Industry sales were higher than the previous quarter," said Mike DeWalt, the vice president of strategic services for Caterpillar, in a conference call. "So that means second-quarter 2014 sales were about 6% higher than the first quarter. Sales improved from first to second for new equipment and for parts. In fact, for parts, it's the second consecutive quarterly improvement."
He added: "Now, it's too soon to suggest that the mining business in turning around, but it's good to see sequential improvement."
Nonetheless, the Construction Industries segment benefited from much stronger sales in North America due to lower inventory shedding from dealers and stronger end-user demand. Continuing improvement in the U.S. construction market is brightening the outlook for this segment and Caterpillar as a whole. Favorable price realization led to record profits in the Energy & Transportation segment, despite a dip in North American power-generation sales.
Capital expenditures for the first six months of 2014, excluding equipment leased to others, were reported to be $710 million, compared with $1.39 billion at the same point in 2013. Manufacturing costs declined after cost discipline and absorption measures were widely adopted; inventory remained mostly flat during the quarter, compared with a sharp decrease in inventory in the same period last year.
Caterpillar executives remain optimistic in their full-year outlook, although slower construction in China and myriad political crises in the Middle East are forcing a cautious stance. Expectations for sales and revenues were narrowed to between $53 billion and $56 billion; the midpoint is a notch lower, as construction-related sales in these places are expected to decline. Still, Caterpillar executives believe that continued economic improvement in developed countries will boost demand for mined commodities and energy sources.
"There's typically seasonality in our sales, and we think that's going to be the case this year, as well," DeWalt said in the conference call. "We basically have the second half of the year as not a lot different from the first half. Now we expect sales and revenues in the third quarter to be similar to sales and revenues in the first quarter of 2014, and fourth quarter sales to be more in line with the second quarter of 2014."
Sales and revenues for the first quarter of 2014 were reported in the previous quarterly statement to be $13.24 billion.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
