Jan 27, 2012

Caterpillar Reports Record Profit for the 4Q and Full-Year 2011

Driven by outstanding execution and stronger global demand, Caterpillar Inc. (NYSE: CAT) delivered record-breaking 2011 sales and revenues of $60.138 billion, an increase of 41 percent from $42.588 billion in 2010. Profit in 2011 was $4.928 billion, an increase of 83 percent from $2.700 billion in 2010. Profit per share of $7.40 was up 78 percent from $4.15 in 2010. Excluding the impact of the acquisition of Bucyrus International, Inc. (Bucyrus), 2011 profit was $7.79 per share, up 88 percent from a year ago.

Fourth-quarter sales and revenues in 2011 were an all-time quarterly record at $17.243 billion, an increase of 35 percent compared with $12.807 billion in the fourth quarter of 2010. Fourth-quarter profit was $1.547 billion compared with $968 million in the fourth quarter of 2010. Profit of $2.32 per share was 58 percent higher than the $1.47 per share in the fourth quarter of 2010.

“Our strategy is squarely focused on customers, and in 2011 our employees, suppliers and dealers delivered. We improved product quality, invested significantly in manufacturing capacity and product development, and improved our market position. We completed two large acquisitions—Bucyrus and Motoren-Werke Mannheim Holding GmbH (MWM)—in important growth industries that are a great strategic fit and provide our customers an even broader range of products,” said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman.

“We also delivered for stockholders with outstanding financial results, beating our previous 2008 profit record of $5.66 per share by more than 30 percent. It was a great year for cash generation as well with our Machinery and Power Systems (M&PS) operating cash flow near $8 billion—our best year ever,” Oberhelman added.

“The 2011 increase in sales and revenues was the largest percentage increase in any year since 1947, and much of it was driven by demand for Caterpillar products and services outside of the United States. As a result, 2011 was a record-breaking year for U.S. exports at nearly $20 billion, which supported thousands of jobs in the United States, demonstrating the tangible benefits of free trade. Sales and export growth creates jobs, both in the United States and around the world. Not including acquisitions, our global workforce grew by more than 14,000 in 2011, and since the start of 2010, we have increased our workforce by more than 33,000, with more than 14,000 of those jobs in the United States,” Oberhelman added.

Cat Financial

Cat Financial reported revenues of $2.645 billion, an increase of $93 million, or 4 percent, compared with 2010. Profit after tax was $378 million, a $100 million, or 36 percent, increase from 2010.

The increase in revenues was principally due to a $76 million favorable impact from higher average earning assets (finance receivables and operating leases at constant interest rates), a $54 million favorable impact from miscellaneous net revenue items and a $49 million favorable change from returned or repossessed equipment. These increases in revenue were partially offset by an $86 million unfavorable impact from lower interest rates on new and existing finance receivables.

Profit before income taxes was $504 million for 2011, compared to $329 million for 2010. The increase was principally due to a $54 million favorable impact from miscellaneous net revenue items, a $49 million improvement in net yield on average earning assets, a $49 million favorable change from returned or repossessed equipment, a $37 million decrease in the provision for credit losses and a $28 million favorable impact from higher average earning assets. These increases in pre-tax profit were partially offset by a $54 million increase in general, operating and administrative expense.

The provision for income taxes for 2011 reflects an annual tax rate of 25 percent compared to 19 percent in 2010. The 2011 tax rate was reduced by a benefit of $15 million related to prior years, while the 2010 tax rate was reduced by a benefit of $22 million related to prior years. The annual tax rate increased during 2011 primarily due to changes in our geographic mix of pre-tax profits.

New retail financing was $11.32 billion, an increase of $1.9 billion, or 20 percent, from 2010. The increase was primarily related to improvements in our Asia/Pacific and Mining and North America operating segments.

During 2011, Cat Financial’s overall portfolio quality reflected continued improvement. At the end of 2011, past dues were 2.89 percent, down from 3.54 percent at the end of the third quarter of 2011 and 3.87 percent at the end of 2010.

Write-offs, net of recoveries, were $158 million for the full-year 2011, compared to $237 million for 2010. Full-year 2011 write-offs, net of recoveries, were 0.70 percent of average annual retail portfolio, compared to 1.04 percent in 2010.

At year-end 2011, Cat Financial’s allowance for credit losses totaled $369 million or 1.47 percent of net finance receivables, compared with $363 million or 1.57 percent of net finance receivables at year-end 2010. The overall increase of $6 million in allowance for credit losses during the year reflects a $31 million increase in allowance due to an increase in the Cat Financial net finance receivables portfolio, partially offset by a $25 million decrease associated with the lower allowance rate.

“We are very pleased with the excellent improvement in Cat Financial’s results in 2011. In addition to increased profitability, new retail financing is up 20 percent from 2010 and portfolio performance has significantly improved, with past dues and full-year write-offs at their lowest levels since 2008,” said Kent Adams, Cat Financial president and vice president of Caterpillar Inc. “Our strategy for continued success remains focused on providing an outstanding customer experience for Caterpillar customers and dealers.”

For over 30 years, Cat Financial, a wholly owned subsidiary of Caterpillar Inc., has been providing financial service excellence to Cat customers. The company offers a wide range of financing alternatives to customers and Cat dealers for Cat machinery and engines, Solar® gas turbines and other equipment and marine vessels. Cat Financial has offices and subsidiaries located throughout the Americas, Asia, Australia and Europe, with headquarters in Nashville, Tennessee.