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Caterpillar 2Q profit up, despite falling sales

Published: Friday, July 25, 2014 1:15 a.m. CDT

Construction and mining equipment maker Caterpillar Inc. on Thursday reported higher-than-expected second-quarter earnings despite a dip in sales.

Peoria-based Caterpillar said net income climbed 4 percent to $999 million, or $1.57 per share, up from $960 million, or $1.45 per share, in the same quarter a year ago.

Revenue fell 3 percent to $14.2 billion.

Analysts expected earnings of $1.51 a share on revenue of $14.5 billion, according to Bloomberg.

Caterpillar said weak sales of its mining equipment were partially offset by improving sales of construction equipment.

But the company warned that it expects weaker sales of construction equipment this year in key markets including China, the Commonwealth of Independent States, which includes Russia, and the Africa/Middle East region.

As a result, Caterpillar slightly lowered its full-year revenue outlook to a range of $54 billion to $56 billion. Caterpillar had previously forecast sales of between $53.2 billion to $58.8 billion.

Despite the lower revenue expectations, Caterpillar increased its profit outlook to $5.75 per share from $5.55 per share. The new estimate includes restructuring costs of about $400 million.

Mike DeWalt, Caterpillar director of investor relations, said in a conference call the company expects the third quarter to be the weakest of the year, with higher sales in the fourth quarter.

Shares fell more than 3 percent to $104.88 in afternoon trading.

Matt Arnold, an equity analyst with Edward Jones, said the downside trend in construction machinery sales is a “modest concern.”

Sales of construction equipment need to climb as much as possible to offset the weak demand for mining equipment, he added.

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