Caterpillar (NYSE:CAT) said Monday that third-quarter per share profit rose 49 per cent on acquisitions and divestures, higher sales volume and improved price realization, but lowered its full year outlook on “weaker-than-expected” global economic conditions.
Shares of the company fell 1.03 per cent in pre market hours, trading at $83.00.
The maker of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines, posted net income of $1.7 billion, or $2.54 per share for the latest period that ended September 30. That compared to $1.14 billion, or $1.71 per share, recorded in the same quarter last year.
Sales rose five per cent to $16.45 billion from $15.02 billion a year earlier.
On average, analysts surveyed by Thomson Reuters expected quarterly earnings per share of $2.23 on revenue of $16.79 billion.
"Last quarter and then again a month ago at MINExpo, we discussed economic and geopolitical headwinds facing the world, and we are certainly continuing to see the impact of those uncertainties in our business," said chairman and CEO Doug Oberhelman.
"Even so, we had a record third quarter, and our entire organization is focused on finishing 2012 as the best year for sales and profit in our history.
"Despite the turbulence in the global economy, we continue to track toward our goals on cost control, margin improvement, product quality, safety and better product availability for our customers."
Caterpillar said that sales in North America were up nine per cent, sales in Asia/Pacific increased eight per cent and sales in Europe, Africa and the Middle East, and Latin America were about flat.
The increase in North America was primarily driven by improvements in the U.S. Within Asia/Pacific, declines in China were more than offset by increases in Australia and other parts of the region, the company said, adding that while sales in Europe were down, sales in Africa, the Middle East and CIS increased.
Caterpillar said that most of the sales increase in the third quarter was in resource industries, with sales up 13 per cent from the third quarter of 2011. Its power systems segment sales were up five per cent, while construction industries' sales were about flat, and financial products' revenues were up three per cent.
Caterpillar noted that its "all other" segment sales were down 31 per cent, primarily a result of the sale of a majority interest in its third party logistics business.
Looking ahead, the company said that it now expects 2012 sales to be about $66 billion, with profit in a range of $9.00 to $9.25 per share.
This is down from a prior outlook of $68 to $70 billion in sales, with profit of about $9.60 per share.
Along with citing weaker global economic conditions, Caterpillar said that its dealers have lowered order rates well below end-user demand to reduce their inventories.
Production has also been lowered, resulting in temporary shutdowns and layoffs, and the company said that lower production will continue until inventories and dealer order rates move back in line with dealer deliveries to end users.
Caterpillar said that it is expecting “slightly better world growth” in 2013 with modest improvement in the U.S., China and most of the developing world, but continuing difficulty in Europe.
Based on its economic forecast, the company said its preliminary outlook for 2013 is for sales to be about the same as 2012 in a range of up five per cent to down five per cent.
"We are taking a pragmatic view of 2013—we're not expecting rapid growth, and we're not predicting a global recession," said Oberhelman.
“At this point, we expect 2013 sales will be similar overall to 2012, but with a slightly weaker first half and a slightly better second half.”