Caterpillar (CAT) Tops Q1 Earnings & Revenues, Raises View
Zacks Investment Research | Apr 24, 2017 11:22PM ET
Caterpillar Inc. (NYSE:CAT) has begun 2017 on a positive note, delivering year-over-year improvement in both the first quarter 2017 top line and bottom line for the first time in 10 quarters. First-quarter 2017 adjusted earnings came in at $1.28 per share that handily beat the Zacks Consensus Estimate of 62 cents and also doubled from prior-year quarter’s earnings of 64 cents.
The better-than-expected results came on the back of the company’s incessant efforts to cut down costs to counter the impact of low-end user demand across many of its businesses. Additionally, the company’s shares advanced 6.52% in pre-market trading, following the release.
Including one-time items such as restructuring costs, Caterpillar reported earnings per share of 32 cents in the quarter, down 3.8% from 46 cents in the prior-year quarter.
Revenues
Revenues improved 3.8% year over year to $9.8 billion in the quarter, surpassing the Zacks Consensus Estimate of $9.36 billion. Favorable price realization and higher sales volume, with the most significant increase in Resource Industries mostly owing to higher end-user demand for aftermarket parts led to the improvement.
Caterpillar witnessed a 14% rise in sales in Latin America primarily due to stabilizing economic conditions in several countries in the region that helped pick up end-user demand. Revenues increased 12% in Asia Pacific driven by increase in construction equipment sales in China resulting from increased infrastructure and residential investment. Further, higher commodity prices and increased mining production favorably impacted demand for aftermarket parts in Australia. Sales in EAME inched up 2%.
In North America, sales were flat as by lower end-user demand for new equipment and the negative impact of changes in dealer inventories resulting from increased inventories in first-quarter 2016 than in the first-quarter 2017 offset higher demand for aftermarket parts. Increased demand for oil and gas applications were also negated by lower sales for infrastructure construction equipment.
Costs & Operating Profit
In the quarter, cost of sales dipped 0.9% year over year to $6.758 billion. Gross profit rose 16% to $3.1 billion. Selling, general and administrative (SG&A) expenses decreased 4% to $1.05 billion. Research and development (R&D) expenses declined 18% year over year to $418 million.
Adjusted operating profit improved 53% year over year to $1.6 billion owing to higher sales volume. Lower period costs, improved variable manufacturing costs and favorable price realization also aided the increase. About half of the variable manufacturing cost improvement was from lower material costs, and price realization was favorable in Construction Industries.
Get The News You Want
Caterpillar, Inc. Price, Consensus and EPS Surprise
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.