What Slowdown? Caterpillar Stuns Market with Record Quarter
Through the first few weeks of earnings season, corporate report cards have been fairly underwhelming thanks to the European debt crisis, slower growth in emerging markets and headwinds facing the U.S. That changed a bit Wednesday morning when Caterpillar offered up a blockbuster report that easily trumped the Street’s expectations.
The heavy equipment maker said it earned $2.54 per share, or $1.7 billion, up 67% from a year ago, on revenue that jumped 22% to $17.4 billion. Both figures were well ahead of expectations, giving the market some relief after Apple disappointed on both the top and bottom lines Wednesday. (See “After Apple Can’t Deliver, Will Weak Growth Choke Caterpillar?”)
Chairman and Chief Executive Doug Oberhelman, said the company’s success comes “despite U.S. construction activity that remains depressed and well below the prior peak, the problems facing Eurozone economies and economic concerns in China,” and that Caterpillar still expects 2012 to be a record year.
The company narrowed its revenue outlook for the full year to $68-$70 billion, and upped its profit outlook to $9.60, a dime above its prior forecast.
Caterpillar’s report offers some reason for optimism among those who feared the current swoon is as severe as those seen the past two summers, and Oberhelman stressed that current conditions are a far cry from the even worse times of 2008 and 2009.
“The good news is, this doesn’t feel like 2008,” the CEO said. “Interest rates are low, central banks are prepared to inject more liquidity if needed, and housing is coming off lows, not a peak, and seems to be improving.”
Oberhelman expressed cautious optimism for the global economy in 2013, noting that easier monetary policy in Brazil and China are likely to give growth a tailwind. Europe has problems that will not be fixed overnight, but Caterpillar expects further monetary easing by the ECB, and a better balance between debt reduction and economic growth plans will help to stabilize the situation.
Shares of Caterpillar jumped 4.6% before the opening bell Wednesday, pacing what looks to be a triple-digit gain for the Dow Jones industrial average at the opening bell. Helping Caterpillar drive the gain was Boeing‘s 2.9% pre-market advance, which came after the aircraft maker also surprised analysts with its second-quarter strength.