Caterpillar’s Revenue Jumps 25% As Demand Picks Up Around The Globe
Caterpillar lifted is annual forecast on Tuesday after trampling expectations in its third quarter and recording a 25% rise in revenue.
Shares jumped 6% in early trading.
The heavy machinery company has started to see a pick-up in demand for its equipment in key markets around the world and now expects revenue of $44 billion this year, up from an earlier forecast of $42 billion to $44 billion. It also expects to benefit from costs cuts and lifted its adjusted profit forecast to $6.25 per share, up from a previous call for $5.
Investors took this as further indication that things are turning around for Caterpillar, which has been in a prolonged slump thanks to sluggish global economic growth and tumbling commodities prices. Many of its customers have tightened their purse strings either out of necessity or caution and it has been forced to layoff thousands of employees to keep a lid on expenses.
“Higher sales volume and our team’s focus on cost discipline resulted in improved profit margins across our three primary segments,” said CEO Jim Umpleby, who took the top job at the beginning of the year.
Caterpillar noted that it’s benefited from construction activity in China, the on-shore oil and gas industry in North America and a rise in capital investments by mining companies.
In the third quarter, Caterpillar posted profits of $1.06 billion, or $1.77 per share, compared to $283 million, or 48 cents per share, a year ago. Excluding certain costs, earnings came in at $1.95 per share, compared with the $1.27 that Wall Street analysts had forecast.
Revenue increased 25% to $11.41 billion, easily topping analyst estimates of $10.65 billion.