Caterpillar Boosts 2015 Profit Forecast but Says Challenges Remain

23 Apr 2015 | Author: | No comments yet »

Caterpillar (CAT) Shares Surge on Q1 Earnings Beat April 23, 2015.

Caterpillar Inc., the largest construction and mining equipment maker, forecast profit for 2015 that topped analysts’ estimates as North American sales improved and as the company cuts costs.Wall Street forecast Caterpillar would deliver quarterly earnings of $1.35 a share on $12.38 billion in revenue, according to a consensus estimate from Thomson Reuters. It has already said it expects relatively slow growth in the world economy and continued weakness in commodity prices—particularly oil, copper, coal and iron ore—to be headwinds for its sales.

However, its incessant efforts to reduce costs and improvement in the construction segment helped to mitigate the effect of lower mining-related sales on its profits in the last few quarters. However, of late, the slump in oil prices pose a threat to its energy and transportation segment that provides engine products and generators to power generation, industrial, oil and gas and transportation applications. On Wednesday, Caterpillar said retail sales of construction machinery reported by dealers rose 2 percent in North America in the quarter and gained 4 percent in Europe, Middle East and Africa. Caterpillar raked in adjusted earnings of $1.86 per share well ahead of the Zacks Consensus Estimate of $1.35, thanks to its focus on operational improvement, including lean manufacturing and cost management despite weak mining demand and low oil prices.

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