UPDATE: Caterpillar's Q4 2012 earnings release is out.
The company reported earnings of $1.91 per share – excluding a recently-announced writedown on a Chinese investment – versus expectations of $1.70.
Sales came in at $16.08 billion, a bit better than the consensus expectation of $16.06 billion.
Caterpillar gave guidance for 2013 earnings of $7.00-9.00 per share versus estimates of $8.54.
The company also says it sees the level of sales in Q1 2013 well below that in Q1 2012.
Turning to the global economic outlook, Caterpillar sees economic growth of at least 2.5 percent in the U.S. in 2013, with Japan expected to grow near 1 percent and China expected to grow 8.5 percent. However, the company says it could be a "tough year" if the growth outlook deteriorates in the second half of 2013.
Shares are moving lower in pre-market trading.
"The range of our 2013 outlook reflects the level of uncertainty we see in the world today. We're encouraged by recent improvements in economic indicators, but remain cautious. While we expect some improvement in the U.S. economy, growth is expected to be relatively weak. We believe China's economy will continue to improve, but not to the growth rates of 2010 and 2011. We also remain concerned about Europe and expect economies in that region will continue to struggle in 2013," said Caterpillar CEO Doug Oberhelman.
Below is the full text from the release:
PEORIA, Ill., Jan. 28, 2013 /PRNewswire/ -- Despite economic and political uncertainty in the United States, continued economic turmoil in much of Europe and slower growth in China, Caterpillar Inc. (CAT) today announced record 2012 sales and revenues of $65.875 billion, an increase of 10 percent from $60.138 billion in 2011. Profit per share of $8.48 was also an all-time record, including the impact of the previously announced goodwill impairment charge of $0.87 per share related to Siwei. The 2012 profit per share of $8.48 was up 15 percent from $7.40 in 2011. Profit was $5.681 billion, an increase of 15 percent from $4.928 billion in 2011.
Fourth-quarter 2012 sales and revenues were $16.075 billion, down $1.168 billion from $17.243 billion in the fourth quarter of 2011. The impact of changes in dealer new machine inventories lowered sales by about $1.4 billion as dealers reduced inventories about $600 million in the fourth quarter of 2012, compared with an increase of about $800 million in the fourth quarter of 2011.
Fourth-quarter 2012 profit was $697 million compared with $1.547 billion in the fourth quarter of 2011. Profit was $1.04 per share in the fourth quarter of 2012 compared with profit per share of $2.32 in the fourth quarter of 2011. Fourth-quarter 2012 profit was negatively impacted by the previously announced goodwill impairment charge of $580 million, or $0.87 per share. Lower sales and revenues and the cost impact from sharply lower production and the $2 billion decline in Caterpillar inventory also had a negative impact on fourth-quarter profit. Those impacts were partially offset by a $300 million positive impact related to the settlement of prior-year tax returns.
"From an operational standpoint, 2012 was a very successful year with record sales and profit in a tough economic climate. Considering the weak economy in the United States, along with much of Europe in recession and China slowing, we had a solid year. Our incremental operating profit pull through was very good, we made progress adjusting inventory levels, and our quality and safety indicators continued to improve," said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman.
"I'm extremely pleased with our performance on reducing inventory $2 billion in the fourth quarter. As the world economy began to soften at mid year, we increased our focus on reducing inventory. Cat dealers also worked to lower their inventories, and, as a result, reduced their order rates during the second half of 2012. The result was a substantial reduction in our production levels and inventory. The reductions had a significantly negative impact on fourth-quarter sales and profit. The $2 billion inventory reduction in the fourth quarter was a remarkable effort, but we're not done. Reduced production levels are likely to continue at least through the first quarter of 2013 until inventories and dealer order rates move back in line with end-user demand," Oberhelman added.
The outlook for 2013 is sales and revenues in a range of $60 to $68 billion and profit per share of $7.00 to $9.00.
"The range of our 2013 outlook reflects the level of uncertainty we see in the world today. We're encouraged by recent improvements in economic indicators, but remain cautious. While we expect some improvement in the U.S. economy, growth is expected to be relatively weak. We believe China's economy will continue to improve, but not to the growth rates of 2010 and 2011. We also remain concerned about Europe and expect economies in that region will continue to struggle in 2013," said Oberhelman.
"If the recent improvement in economic indicators continues, 2013 could be another record year for Caterpillar. We expect the first half of 2013 will be weaker than the first half of 2012, with better growth in the second half. However, if, like the last two years, growth and confidence decline in the second half, 2013 could be a tough year. Either way, as we demonstrated with inventory reductions in the fourth quarter, our team is prepared to execute and deliver," Oberhelman added.
ORIGINAL: Minutes away from Caterpillar's fourth-quarter 2012 earnings results, expected at 7:30 AM ET.
The global construction equipment manufacturer is expected to announce earnings of $1.70 per share, down from $2.26 in the third quarter.
Q4 sales are expected to clock in at $16.06 billion, down slightly from sales of $16.45 billion in the third quarter.
Given the nature of Caterpillar's business, its earnings releases are always closely watched for signs on the health of the global economy.
Furthermore, the company just announced a $580 million writedown on an investment in China, which will come out of Q4 2012 earnings.
We will have Caterpillar's results at 7:30 AM ET. Click here to refresh for LIVE updates >
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