Caterpillar Third-Quarter Profit Declines 53% as Sales Slide

Construction-equipment maker Caterpillar Inc. on Tuesday reported third-quarter profit of $404 million on revenue of $7.298 billion. Those numbers were down 53% and 44%, respectively, from the same period one year ago. Significantly lower sales volume was partially offset by lower costs and a favorable effective tax rate, the company said. Despite the weak results, Chairman and CEO Jim Owens sounded an upbeat note for the whole of 2009 and expressed belief that economic conditions would improve in 2010. "We believe the third quarter marked the low point for Caterpillar sales and revenues in what has been the toughest recession since the 1930s. We are seeing encouraging signs that indicate a recovery may be under way," Owens said. "While we are still navigating through a very difficult environment in 2009, we see signs of improving economic conditions throughout most of the world." Caterpillar said it expects full-year 2009 sales and revenues in a range of $32 billion to $33 billion, and an EPS of $1.10 to $1.30 per share, compared with a previous range of 40 cents to $1.50 per share. Looking ahead, the company said the preliminary outlook for 2010 sales and revenues is up 10% to 25% from the midpoint of the 2009 outlook range, boosted in part by the end of dealer inventory reductions. "While 2010 will still be a difficult year, we expect improvement in our top line from the lows of 2009, and it's critical that we manage on the way up as well as we did in the face of declining volume. As a result, we've already started planning for an upturn. When it comes, it can come quickly, and we, our dealers and our suppliers will be prepared," Owens said.