Caterpillar Inc. reported record first-quarter 2006 sales and revenues of $9.392 billion and record first-quarter profit of $840 million or $1.20 per share. Sales and revenues increased 13 percent, and profit per share was up 48 percent compared with the first quarter of 2005.
“I’m very pleased with our performance in the first quarter; it’s a great beginning to the year,” said Caterpillar Chairman and Chief Executive Officer Jim Owens. “Our operating profit continues to improve as material costs were relatively flat, and we’re realizing the cumulative benefit of price actions implemented over the last 18 months. Further, we’re working to improve our production capability with better material flow from suppliers and a steady reduction in supply chain bottlenecks. Collectively, Caterpillar people are focused on execution in the areas of safety, product quality, and inventory turns, and we’re leveraging 6 Sigma in order to realize significant gains in these areas.”
Sales and revenues increased $1.053 billion from the first quarter one year ago. Of the increase, $587 million was from improved price realization, $511 million was due to higher sales volume, and $99 million was from higher Financial Products revenues. The effect of currency on sales was negative $144 million, primarily due to a weaker Euro.
First-quarter profit increased $259 million or $0.39 per share from first quarter 2005. The increase largely was due to improved price realization and higher sales volume, partially offset by an increase in core operating costs.
Caterpillar’s first-quarter operating cash flow was $527 million, an increase of $348 million compared with the first quarter of 2005. “Underlying business conditions and demand for our products continue to be strong,” said Owens. “The fundamental strength of the industries we serve—notably global mining, infrastructure construction, oil and gas, and energy—continued to improve. These favorable market conditions, combined with Caterpillar people and dealers, allow us to serve customers with unparalleled product support and compete successfully in the global economy.”
Caterpillar raised its 2006 profit outlook to a range of $4.85 to $5.20 per share, up from $4.04 per share in 2005. The previous outlook forecasted 2006 profit in a range of $4.65 to $5 per share. The forecast for sales and revenues in 2006 is about $40 billion—unchanged from the prior outlook and up from $36.339 billion in 2005.
Financial Services
Caterpillar Financial Services Corporation (Cat Financial) reported record revenues of $657 million for the first quarter of 2006, an increase of $114 million or 21 percent, compared with the same period in 2005. Profit after tax was a record $118 million, a $35 million or 42 percent increase over the first quarter of 2005.
Of the increase in revenues, $51 million resulted from the impact of continued growth of finance receivables and operating leases, $50 million from the impact of higher interest rates on new and existing finance receivables, $7 million higher net gain on returned or repossessed equipment, and a $6 million increase in various other revenue items.
New retail financing of $2.6 billion, an increase of $182 million or 7 percent over the first quarter of 2005, was a record first quarter. The increase largely was the result of an increase in earning assets in the North America segment.
Caterpillar Vice President and Cat Financial President Kent Adams said, “We are off to a great start in 2006 with a record quarter for revenues and net income, the continued growth and strong performance of our portfolio. Our results reflect the coordinated efforts of our employees, the Caterpillar marketing organizations, and the Caterpillar dealers.” IBI
