Some good news in Caterpillar’s first-quarter earnings report, which came out Thursday … but mining continues to struggle.
From the Reuters story …
Caterpillar said it expected its sales to the global construction industry to increase 10 percent from 2013, up from a previously anticipated rise of about 5 percent.
But it cautioned that 2014 would be “another very tough year” for mining, another key market, and that its outlook reflected an anticipated drop of about 80 percent in sales of large mining trucks from the company’s peak year in 2012.
Adam Fleck, an analyst at Morningstar, said he was pleasantly surprised by the company’s “very solid cost control in construction in particular,” where operating margins continued to grow and “were at their highest quarterly level in several quarters”, even though they were typically more compressed than in the mining equipment category.
Fleck said the weakness in mining “wasn’t terribly surprising” and added that because that once-critical business accounted for just 17 percent of sales and 12 percent of operating profit in the first quarter, any continued weakness in the sector was “more of a headline risk than a true economic one.”
The better-than-expected report was tinged with caution. Chief Executive Officer Doug Oberhelman said the Peoria, Illinois-based company was watching several regions closely. Having visited China recently, he said the construction industry there was facing challenges.
Caterpillar was also concerned about the situation in Ukraine and Russia, he added.
The news followed stories this week of mixed dealer data and of reduced 2013 compensation for the CEO.
Of course, we’ll continue to watch the Caterpillar news closely, especially that from the mining front, given our (and Oak Creek’s) position as the center of Cat’s global mining operations.
With that in mind, I had a really positive meeting with several local Caterpillar officials on Friday, as part of my ongoing efforts to introduce myself to local elected official and business owners.
I look forward to keeping lines of communication open … and I have Caterpillar’s commitment to do the same. Having a strong partnership with our largest employer is a priority for me as mayor.
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