Caterpillar records big profit increase in 1Q

5/19/2015 12:09:27 PM by

As Wayne Grayson reports for Equipment World, Caterpillar exceeded estimates and increased its profit 20 percent in 1Q. Grayson emphasizes that this was despite a dip in sales: "The company reported a 20-percent boost in profit over Q1 2014 to $1.1 billion, or $1.81 per share," he writes, adding: "This was despite a 4-percent sales and revenues drop to $12.7 billion."

Cat chairman and CEO Doug Oberhelman attributed the company's positive results to its cost-cutting efforts and the high performance of its Energy & Transportation division.

During the quarter, the company's construction segment experienced a 7 percent decline in sales to $5 billion. Meanwhile, its Resource Industries segment saw a 9 percent loss to $2.1 billion. One of the segments to remain flat was Energy & Transportation. Grayson emphasizes, however, that this was not a negative, but rather "a positive," "given the volatility due to the drop in oil prices, at $4.7 billion."

The company has become more optimistic about its profit outlook for 2015, moving it upward to between $4.70 and $5.00 per share, while the previous outlook was between $4.60 and $4.75 per share.

Grayson emphasizes that the "company's 1Q profit benefitted from a pre-tax gain of $120 million, earned from the sale of remaining interest in its former third party logistics business. The company sold a majority interest in the business in 2012."

Caterpillar has also engaged in cost-cutting measures, cutting its number of full-time employees by 3,257 in the last year. With the addition of 772 flexible hour workers, the total decrease in the company's workforce is only 2,485. Currently, the company employs 129,458 workers worldwide.

In a prepared statement, Oberhelman emphasized the key role that operational improvement, especially lean manufacturing and cost management, played in "helping" the company "in what is a tough time for some of our important cyclical businesses."

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