Cat (CAT) Reports Solid Growth in Q4; FY12 Outlook Above the Street
Total sales were $17.243 billion, an increase of $4.436 billion, or 35 percent, from the fourth quarter of 2010. Machinery and power system sales rose 35 percent to $16.557 billion. Asia was the company’s strongest segment with a 49 percent increase in total sales. Latin America came in second with 33 percent growth. Sales in North America only grew by 28 percent.
Manufacturing costs were up $228 million primarily due to higher period costs related to incentive compensation, production volume and capacity expansion programs. Material costs were up from the fourth quarter of 2010 primarily due to higher steel costs. Total operating costs rose from $11.52 billion to $15.28 billion.
Operating profit was $1.960 billion compared with $1.291 billion for the fourth quarter of 2010. Profit per share rose to $2.32 from $1.47 per share in the fourth quarter 2010.
Analysts on the Street were expecting sales of $16.05 billion and EPS of $1.73.
Cash and short term investments fell from $3.59 billion at the end of 2010 to $3.06 billion at the end of 2011. It’s also notable that CAT ended the year with 51.7 percent more in inventories, totaling $14.54 billion.
"Our strategy is squarely focused on customers, and in 2011 our employees, suppliers and dealers delivered. We improved product quality, invested significantly in manufacturing capacity and product development, and improved our market position. We completed two large acquisitions—Bucyrus and Motoren-Werke Mannheim Holding GmbH (MWM)—in important growth industries that are a great strategic fit and provide our customers an even broader range of products," said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman.
Expected 2012 sales of $68-$72 billion were well above the Street estimate of $67.3 million. Profit per share is expected to be about $9.25 at the middle of the range, which compares to the Street estimate of $9.10. The outlook includes full-year results for the two large acquisitions that we completed in 2011—Bucyrus and MWM. The company anticipates improved price realization of 1 to 1.5 percent—a modest improvement that is consistent with its strategy to improve customer value and improve market position