Construction giant Caterpillar sees ‘signs of improvement in the world economy’
Stronger construction sector sales helped Caterpillar overcome the global mining downturn to boost earnings in the fourth quarter, but the heavy equipment maker warned Monday of additional job cuts this year.
Caterpillar said profits rose 44 percent from a year ago, besting analyst expectations as it snapped a string of disappointing results.
Chief executive Doug Oberhelman pointed to “some signs of improvement in the world economy,” but the company expects additional restructuring in 2014 after cutting nearly 10,000 jobs last year.
“We continue to be cautious and are making the tough decisions necessary to better position us down the road when economic conditions improve and our sales rebound,” Oberhelman said.
Net income for the fourth quarter came in at $1.0 billion on revenues of $14.4 billion, up from the year-ago level of $697 million on $15.4 billion in revenues.
The results equated to $1.54 per share, well above the $1.28 seen by analysts.
Numbers for the whole year showed the impact of the global mining slump as Anglo American, Vale and other mining giants cut investment and orders for Caterpillar’s heavy machinery and engines.
Earnings were $3.8 billion on revenues of $55.7 billion, compared with $5.7 billion on revenues of $65.9 billion.
Earnings per share fell to $5.75 from $8.48 for 2012.
The company forecast steady sales and revenues in 2014 but a gain in profits, with earnings per share reaching $5.85 per share, even amid caution over emerging markets like China, a major buyer of its equipment.
It warned of three major risks: the political fight over the US debt limit hurting the US economy, slower-than-expected growth in China, and a weak rebound in Europe.
“The unwillingness of the European Central Bank to take more aggressive actions risks leaving the economy struggling for years,” it said.
The company also announced a new $10 billion stock repurchase program which will expire in 2018.
Last year, Caterpillar closed or restructured facilities in at least 10 cities, including a construction site in Grenoble, France and resources unit in Texas.
In December it announced plans to restructure its Gosselies, Belgium manufacturing facility, but the move awaits approval by Belgian government officials. Employee separation costs are estimated at $300 million.
Caterpillar shares were up 4.3 percent to $89.88 in midday trade Monday.