Caterpillar reported a 25-percent increase in profit in 1Q 2015 to $1.81 per share, up from $1.44 in 1Q 2014. Sales and revenue for the quarter were $12.7 billion, down 4 percent from $13.2 billion in 1Q 2014.
“We delivered solid results for the first quarter of this year, said Doug Oberhelman, chairman/CEO. "Our focus on operational improvement, including lean manufacturing and cost management, is helping in what is a tough time for some of our important cyclical businesses. We continue to execute on improving safety, quality, inventory turns, delivery performance and market position.
“The first quarter wasn’t without challenges," he said. "Sales and revenues were off about 4 percent from the first quarter of last year, mining remained weak, and construction was down in most regions. On the plus side, Energy & Transportation turned in another great quarter, although we don’t expect this to continue due to the oil-related portion of the business.”
Profit for the quarter included a negative impact of $0.05 per share for restructuring costs, but the sale of Caterpillar's remaining interest in its former third-party logistics business brought a pre-tax gain of $0.14 per share.
The balance sheet remained strong in the first quarter and Machinery, Energy & Transportation (ME&T) operating cash flow was more than $1 billion. Consistent with Caterpillar’s priorities for cash deployment, it repurchased $400 million of common stock in the first quarter of 2015 under the $10 billion repurchase authorization that was approved by the Board in 2014. Given expectations for cash flow and capital expenditures in 2015, the company currently expects to continue to repurchase stock this year.
Caterpillar's 2015 Outlook
The company's 2015 outlook for sales and revenues remains unchanged at about $50 billion. However, the outlook for profit per share has improved slightly. It now expects that profit per share will be $4.70, or $5.00 per share excluding restructuring costs. The previous outlook for profit per share was $4.60, or $4.75 excluding restructuring costs. The expectation for restructuring costs is now about $250 million, $100 million higher than the previous outlook with the increase primarily related to facilities that produce mining products.
“We had a solid first quarter, which led to raising the profit outlook for 2015," Oberhelman said. "However, we continue to face headwinds and uncertainty in 2015, and our outlook for the year reflects that. We expect sales and profit in each of the remaining three quarters of 2015 to be lower than the first quarter. We expect sales for oil applications to decline starting in the second quarter, and from a profit perspective, the first quarter included the gain on the sale of our remaining interest in the logistics business and that won’t repeat. The first quarter is usually the most seasonally favorable of the year for costs, and we don’t expect the rest of the year to be as favorable. In addition, we expect some increase in research and development expense as we go through the year.
“We’re working to improve what we can control so that when our cyclical businesses recover, we will be ready to respond quickly, benefiting our company, our customers and our stockholders,” Oberhelman said.
Caterpillar’s worldwide, full-time employment was 113,322 at the end of the first quarter of 2015, compared with 116,579 at the end of the first quarter of 2014, or a decrease of 3,257 full-time employees. The flexible workforce increased 772, resulting in a total decrease in the global workforce of 2,485. The decrease was primarily the result of restructuring programs.