The construction equipment manufacturer reported second quarter earnings of $1.49 per share, topping analyst estimates of $1.26 per share. Revenue of $11.33 billion also topped analysts' $10.93 billion expectations.
"Construction in China and gas compression in North America were highlights. Mining and oil related activities have come off recent lows and we're seeing improving demand for construction in most regions.," CEO James Umpleby told listeners on a Tuesday conference call.
Based on a solid year to date Umpleby said the company's raising the midpoint of its 2017 sales and revenue by $3.5 billion to $43 billion. That represents a 12% jump from a year ago. For the year, the company said it now expects to earn $5 per share on an adjusted basis.
"In the second half of this year, we'll make targeted investments to improve competitiveness and drive long-term profitable growth," the CEO said, He added that, "We'll continue investing to expand our digital capabilities and accelerate important product development programs. We're moving forward to ensure we're helping our customers harness the power of data and technology to be as productive and efficient as possible.
Bradley Halverson, CFO and Group President at Caterpillar told listeners that construction industry sales rose 11% to $4.9 billion in the quarter. and explained that higher sales volume to Asia Pacific and Latin America and favorable price realization
contributed to the increase.
"Most of the sales increase in the quarter for construction industries was driven by what has continued to be strong end user demand in China for construction equipment, most notably excavators. Through the first half of the year, the 10 ton and above excavator industry in China was up about 130% from last year."
That's good, but he added the caveat that while demand for 10 ton and above excavators is up significantly, versus the last two years, it is still far below highs achieved earlier this decade." still far below highs achieved earlier this decade.
"Continued strength in China is dependent on underlying demand, government support, and accommodating credit," Halverson concluded. Caterpillar has been fighting a $2 billion package of taxes and penalties proposed by the IRS, with the company asserting that it "complied with applicable tax laws and did not violate judicial doctrines."
Caterpillar has been fighting a $2 billion package of taxes and penalties proposed by the IRS, with the company asserting that it "complied with applicable tax laws and did not violate judicial doctrines."
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