Record Third Quarter for Caterpillar

October 26, 2006 • With a strong focus on executing its corporate strategy, Caterpillar Inc., Peoria, Ill., has reported record third quarter 2006 sales and revenues of $10.51 billion, an increase of 17% from Q3 2005, and record third quarter profits of $769 million, an increase of 21% from the same quarter last year. Sales and revenues of $30.51 billion and profits of $2.65 billion, or $3.86 per share, for the first nine months of 2006 were also record figures.

 

“We achieved this quarter's results due in great part to the efforts of Caterpillar's employees, dealers, and suppliers who continue to work to remove bottlenecks and increase production for a number of products,” said Jim Owens, Caterpillar chairman and chief executive officer. “Team Caterpillar remains focused on achieving our 2010 goals and executing our corporate strategy with 6 Sigma; especially in the areas of quality, safety, and velocity.”

 

Sales and revenues increased $1.54 billion • $1.06 billion from higher sales volume, $290 million from improved price realization, $97 million from the effects of currency, and $90 million from higher financial products revenues.

 

Third-quarter profits increased $102 million from third quarter 2005. The increase was largely due to improved price realization and higher sales volume, partially offset by higher costs, including approximately $80 million of expense related to various legal disputes, principally a settlement with Navistar.

 

The company expects sales and revenues for 2006 to be about $41 billion, up about 13% from 2005, and profit per share to be in a range of $5.05 to $5.30. The previous outlook reflected sales and revenues up 12 to 15 percent and profit per share of $5.25 to $5.50. The decline from the previous outlook was a result of charges related to third-quarter legal disputes, higher core operating costs, and slightly lower sales volume. The preliminary outlook for 2007 sales and revenues is flat to up 5% from 2006, and profit per share is expected to be flat to up 10% from the midpoint of the 2006 outlook range.

 

“We're expecting slightly higher sales and revenues in 2007 despite the prospects of a slowing U.S. economy, a sharp drop in sales of on-highway truck engines, and weaker housing construction," Owens said. "It's a testament to the strength and diversity of the industries we serve and the global nature of our products and services that we expect at least modest growth despite a weaker U.S. economy and significant declines in important North American markets. While next year will likely be a year of slower corporate growth, the fundamentals for key global industries we serve are strong, and after the 2007 pause, we expect continued solid growth through the end of the decade."