Caterpillar Profit Falls 55% in Fourth Quarter 2012

January 28, 2013

Caterpillar 4Q profit fell 55 percent as a result of charges resulting from the accounting problems in it Chinese subsidiary, as well as slow sales because of high dealer inventories.

Fourth-quarter sales and revenue were $16.1 billion, down $1.2 billion from 2011, garnering a profit of $0.7 billion versus $1.4 billion in 2012.

Caterpillar also announced fiscal 2012 results. Sales and revenues for the year totalled $65.9 billion, an increase of 10 percent from $60.1 billion in 2011. Profit for the year was $5.7 billion, an increase of 15 percent from $4.9 billion in 2011.

“From an operational standpoint, 2012 was a very successful year with record sales and profit in a tough economic climate,” said chairman/CEO Doug Oberhelman. “Considering the weak economy in the United States, along with much of Europe in recession and China slowing, we had a solid year.

“I'm extremely pleased with our performance on reducing inventory $2 billion in the fourth quarter,” he said. “As the world economy began to soften at mid year, we increased our focus on reducing inventory. Cat dealers also worked to lower their inventories, and, as a result, reduced their order rates during the second half of 2012. The result was a substantial reduction in our production levels and inventory. The reductions had a significantly negative impact on fourth-quarter sales and profit. The $2 billion inventory reduction in the fourth quarter was a remarkable effort, but we're not done. Reduced production levels are likely to continue at least through the first quarter of 2013 until inventories and dealer order rates move back in line with end-user demand.”

Caterpillar’s 2013 Outlook

The outlook for 2013 is sales and revenues in a range of $60 to $68 billion and profit per share of $7.00 to $9.00.

“The range of our 2013 outlook reflects the level of uncertainty we see in the world today,” Oberhelman said. “We’re encouraged by recent improvements in economic indicators, but remain cautious. While we expect some improvement in the U.S. economy, growth is expected to be relatively weak. We believe China’s economy will continue to improve, but not to the growth rates of 2010 and 2011. We also remain concerned about Europe and expect economies in that region will continue to struggle in 2013.”