Ct Automotive Regulatory News (CTA)

21 Jul 2009 17:43



Caterpillar Inc.

2Q 2009 Earnings Release

July 21, 2009

FOR IMMEDIATE RELEASE

Caterpillar Delivers Second-Quarter Profit and Increases 2009 Profit Outlook

Focus on cost and inventory reduction positions Caterpillar for sustained industry leadership

PEORIA, Ill.- Caterpillar Inc. (NYSE: CAT) today reported a second-quarter profit of $0.60 per share, down $1.14 per share from the second quarter of 2008. Excluding redundancy costs, profit was $0.72 per share. Redundancy costs related to reducing employment were $85 million before tax or $0.12 per share in the quarter.  Sales and revenues of $7.975 billion were down 41 percent from $13.624 billion in the second quarter 2008.

"Our profit this quarter, despite the sharp decline in sales, is a tribute to Team Caterpillar's response to this severe global recession and the continued deployment of our economic trough strategy," said Chairman and Chief Executive Officer Jim Owens.  "There is still a great deal of economic uncertainty in the world, but we are seeing signs of stabilization that we hope will set the foundation for an eventual recovery. Credit markets have improved significantly. Fiscal policy and monetary stimulus have been introduced around the world, and we are seeing signs, particularly in China, that they are beginning to work. In addition, we've seen many key commodity prices increase from their lows in the first quarter, and they are holding in a range that is usually positive for investment," said Owens.

"With our dedicated employees, strong dealer network and supply base, great lineup of products and the increasing impact of integrated service businesses, I am more confident than ever that we will strengthen our industry leadership as we work through this recession," Owens added.

The second-quarter profit of $371 million was down $735 million from $1.106 billion in the second quarter of 2008.  The decline was largely a result of lower sales volume and $85 million of redundancy costs. These negative impacts were partially offset by lower Selling, General and Administrative (SG&A) and Research and Development (R&D) expenses, favorable price realization, LIFO inventory decrement benefits and a lower tax rate.

In addition to profit, Caterpillar is highly focused on delivering positive cash flow in 2009 and is committed to its $3 billion inventory reduction goal for the year. Utilizing the Caterpillar Production System (CPS) with 6 Sigma, the company reduced inventory in the second quarter by more than $800 million, and through the first half of the year inventory has declined by more than $1.6 billion.

"In addition to our ability to generate solid profits in this economic climate, I'm pleased with our work to generate positive cash flow and maintain considerable financial strength during this challenging period," Owens said. 

Outlook

The company is updating its outlook for 2009 by tightening the sales and revenues range and improving profit expectations.  For sales and revenues, the range has been tightened to $32 billion to $36 billion.  The 2009 profit outlook is a range of $0.40 to $1.50 per share including redundancy costs of about $0.75 per share. Excluding redundancy costs, profit is forecast to be between $1.15 and $2.25 per share.

"Team Caterpillar is now halfway through one of the most challenging years in the company's history," Owens said.  "Our 2009 sales have been hurt by weak end-user demand and significant reductions in dealer inventory. In fact, dealers have reduced their machine inventories by about $1.5 billion through the first half of the year and could reach close to $3 billion by year-end. As tough as this year has been, the improved profit outlook is a tangible sign of what happens when the entire team is pulling in the same direction and deploying the trough strategy we put in place over the past four years.  We are very pleased with the way our people have stepped up and responded to this extraordinary period of economic turmoil," Owens said.

Notes: 

Information on non-GAAP financial measures, including the treatment of redundancy costs in the second quarter and in the outlook, is included on page 25.

Glossary of terms is included on pages 23-24; first occurrence of terms shown in bold italics.

For more than 80 years, Caterpillar Inc. has been making progress possible and driving positive and sustainable change on every continent. With 2008 sales and revenues of $51.324 billion, Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The company also is a leading services provider through Caterpillar Financial Services, Caterpillar Remanufacturing Services, Caterpillar Logistics Services and Progress Rail Services. More information is available at: www.cat.com.

Caterpillar contact: Jim Dugan, Corporate Public Affairs, (309) 494-4100 (Office) or (309) 360-7311 (Mobile)

SAFE HARBOR 

Certain statements in this release relate to future events and expectations and as such constitute forward-looking statements involving known and unknown factors that may cause actual results of Caterpillar Inc. to be different from those expressed or implied in the forward-looking statements. In this context, words such as "will," "would," "expect," "anticipate," "should" or other similar words and phrases often identify forward-looking statements made on behalf of Caterpillar. It is important to note that actual results of the company may differ materially from those described or implied in such forward-looking statements based on a number of factors and uncertainties, including, but not limited to, (i) adverse change in general economic conditions; (ii) adverse change in the industries Caterpillar serves including construction, infrastructure, mining, energy, marine and electric power generation; (iii) Caterpillar's ability to manage material, including steel, and freight costs; (iv) Caterpillar's ability to generate cash from operations, secure external funding for its operations and manage its liquidity needs; (v) material adverse change in customers' access to liquidity and capital; (vi) currency exchange or interest rates changes; (vii) political stability; (viii) market acceptance of the company's products and services; (ix) significant changes in the competitive environment; (x) epidemic diseases; (xi) severe change in weather conditions negatively impacting operations; (xii) changes in law, regulations and tax rates; and (xiii) other general economic, business and financing conditions and factors described in more detail in the company's Form 10-K filed with the Securities and Exchange Commission on February 20, 2009. This filing is available on our website at www.cat.com/sec_filings. We do not undertake to update our forward-looking statements. 

Click here to view Caterpillar Inc.'s complete 2nd Quarter 2009 financial results release issued on July 21, 2009:

http://www.rns-pdf.londonstockexchange.com/rns/0538W_-2009-7-21.pdf