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Caterpillar Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 6, 2012 11:19AM
Caterpillar Inc. (CAT) filed Quarterly Report for the period ended 2012-06-30. Caterpillar Inc. has a market cap of $55.48 billion; its shares were traded at around $86.74 with a P/E ratio of 9.3 and P/S ratio of 0.9. The dividend yield of Caterpillar Inc. stocks is 2.5%. Caterpillar Inc. had an annual average earning growth of 12.2% over the past 10 years. GuruFocus rated Caterpillar Inc. the business predictability rank of 2-star.
Highlight of Business Operations:Profit per share for the six months ended June 30, 2012 was $4.90 per share, an increase of $1.54 per share from a profit of $3.36 per share for the six months ended June 30, 2011. Profit of $3.285 billion was 47 percent higher than profit of $2.240 billion for the six months ended June 30, 2011. Sales and revenues for the six months ended June 30, 2012 were $33.355 billion, up $6.176 billion, or 23 percent, from $27.179 billion for the six months ended June 30, 2011.
Total sales and revenues were $33.355 billion for the six months ended June 30, 2012, an increase of $6.176 billion, or 23 percent, from the six months ended June 30, 2011. The improvement was a result of sales volume, acquisitions and price realization. Sales volume improved $3.092 billion, as sales for both new equipment and aftermarket parts increased. Sales volume increased in Resource Industries, Construction Industries and Power Systems. Excluding acquisitions, sales increased in all geographic regions except Latin America, with the most significant improvement in North America. The acquisition of Bucyrus added $2.177 billion in sales, and the Motoren-Werke Mannheim Holding GmbH (MWM) acquisition added $339 million in sales. Price realization improved $805 million.
Bucyrus sales were $2.177 billion for the six months ended June 30, 2012, with $565 million in North America, $322 million in Latin America, $452 million in EAME and $838 million in Asia/Pacific.
In the second quarter of 2012, three sale transactions were completed whereby we sold portions of the Bucyrus distribution business to Finning International, WesTrac Pty Limited, a wholly owned subsidiary of Seven Group Holdings Limited, and Ferreyros S.A.A. for $306 million, $400 million and $75 million respectively, subject to certain working capital adjustments. After-tax profit was unfavorably impacted by $8 million in the second quarter of 2012 as a result of the Bucyrus distribution business divestiture activities. This is comprised of $160 million of income (included in Other operating (income) expenses) related to the sales transactions, offset by costs incurred related to the Bucyrus distribution divestiture activities of $57 million (included in Selling, general and administrative expenses) and income tax of $111 million.
We recognized pension expense of $183 million and $362 million for the three and six months ended June 30, 2012, as compared to $168 million and $327 million for the three and six months ended June 30, 2011. The increase in expense is due to higher amortization of net actuarial losses due to lower discount rates at the end of 2011 and asset losses in 2011. In addition, 2012 expense included $10 million of special termination benefits related to the closure of the Electro-Motive Diesel facility discussed below. This was partially offset by higher amortization of asset gains from 2009 and 2010. Accounting guidance on retirement benefits requires companies to discount future benefit obligations back to today s dollars using a discount rate that is based on high-quality fixed-income investments. A decrease in the discount rate increases the pension benefit obligation, while an increase in the discount rate decreases the pension benefit obligation. This increase or decrease in the pension benefit obligation is recognized in Accumulated other comprehensive income (loss) and subsequently amortized into earnings as an actuarial gain or loss. The guidance also requires companies to use an expected long-term rate of asset return for computing current year pension expense. Differences between the actual and expected returns are also recognized in Accumulated other comprehensive income (loss) and subsequently amortized into earnings as actuarial gains and losses. As of June 30, 2012, total actuarial losses, recognized in Accumulated other comprehensive income (loss), related to pensions were $8.51 billion. The majority of the actuarial losses are due to lower discount rates, plan asset losses and losses from other demographic and economic assumptions over the past several years.
Stocks Discussed: CAT,