Caterpillar reports record sales, revenues, profits for 2012, despite Siwei charge

Updated Jan 29, 2013

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Despite continued economic uncertainty and a bad fourth quarter due to a $580 million charge taken after uncovering an accounting scheme at a Chinese unit, Caterpillar today reported all-time record sales, revenues and profit per share in 2012.

Sales and revenues were up 10 percent from 2011 at $65.9 billion while profit per share was up 15 percent at $8.48. Profit was up 15 percent as well to $5.7 billion.

The fourth quarter report did not hold as much good news however, with profits, sales and revenues all down from the previous year.

The company reported sales and revenues in the fourth quarter of $16.1 billion, down 6.7 percent from the same quarter in 2011. The company said in a prepared statement that dealers lowered new machine inventories by $600 million in the fourth quarter, lowering sales by about $1.4 billion.

Profit for the fourth quarter was heavily impacted, reported at $697 million and down a whopping $850 million or 55 percent from 2011. Profit per share was at $1.04 in the fourth quarter down from $2.32 in the previous year.

The lion’s share of the impact here was the $580 million non-cash charge the company took in the wake of uncovering the accounting scheme at Siwei. Lower sales and revenues in addition to the cost impact from sharply lower production and a $2 billion decline in Caterpillar inventory made up for the remainder of the quarter’s negative impact, the company said.

However, Caterpillar says these impacts were partially offset by a $300 million settlement of prior-year tax returns.

“I’m extremely pleased with our performance on reducing inventory $2 billion in the fourth quarter.  As the world economy began to soften at mid year, we increased our focus on reducing inventory,” said said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman in a prepared statement. “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,” Oberhelman added.

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Looking forward, Caterpillar projects 2013 sales and revenues to fall within a range of $60 billion to $68 billion. It expects to see profit per share of $7.00 to $9.00. Oberhelman said the company expects the first half of this year to be weaker than 2012 with better growth in the second half.

“The range of our 2013 outlook reflects the level of uncertainty we see in the world today.  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,” he said. “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,” said Oberhelman.

“… However, if, like the last two years, growth and confidence decline in the second half, 2013 could be a tough year.”