Caterpillar Inc. today reported a 4 percent second-quarter increase in profits despite lower sales and revenue.
The Illinois-based construction equipment company said it earned $999 million, or $1.57 a diluted share, for the quarter that ended June 30, compared with $960 million, or $1.45 a share, a year earlier. Excluding restructuring costs, profit per share was $1.69.
Revenue was $14.15 billion, compared with $14.62 billion in the quarter a year earlier.
"We're pleased with our second-quarter results, particularly the improvement in profit,” Caterpillar chairman and CEO Doug Oberhelman said in a statement. “We increased the bottom line despite a weak quarter for our Resource Industries segment, which is principally mining. Three key things are contributing to the continuing strength of our financial results — the diversity of our businesses, substantial success in operational improvements through the execution of our strategy and the strength of our cash flow and balance sheet.
"Our construction industries and energy & transportation segments continue to improve,” he added. “Construction industries had a good quarter, with sales up 11 percent and operating profit up 83 percent from the second quarter of 2013. The improvement in construction industries, along with sales stability and record profit from energy & transportation, has helped us improve profit despite the downturn in the mining industry.”
Caterpillar now anticipates a 2014 adjusted profit of $6.20 a share, up from a previous outlook of $6.10 a share.
The company narrowed its revenue guidance for the year. Caterpillar now expects revenue to be in a range of $54 billion to $56 billion. Previously it predicted that revenue would fall between $53.2 billion and $58.8 billion.
"After a sizable drop in sales and revenues in 2013, our ongoing forecasting process has, since the third quarter of last year, pegged 2014 as a roughly flat year for sales,” Oberholman said. “That's still the case. There have been pluses and minuses, but they've both been relatively muted in the context of our total sales and revenues. While we'd certainly like to see improvement in economies around the world, and more specifically, the mining industry, the stability that we've seen this year has helped. Even though sales and revenues are relatively flat, compared to last year, we've improved the bottom line with better execution and continued focus on costs."
Caterpillar plans to buy back about $2.5 billion of common stock in the third quarter. The repurchase is part of a $10 billion buyback program the company’s board approved in the first quarter. Caterpillar repurchased about $1.7 billion of shares in the first quarter.