Summary
Caterpillar Inc. (CAT) filed an 8-K on October 16, 2001, to provide prepared statements from their Third Quarter 2001 results webcast. The company reported sales and revenues of $5.06 billion, a 6% increase in machinery and engines sales volume, and a 9% increase in financial products division revenues compared to the third quarter of 2000. Profit for the quarter was down 5% year-over-year, though this was primarily due to a favorable one-time tax adjustment in the prior year. Excluding this, profit increased slightly due to higher sales volume, partially offset by manufacturing inefficiencies and increased SG&A expenses related to growth initiatives and cost reduction projects. The company also provided an outlook for the remainder of 2001 and into 2002, noting increased uncertainty for the fourth quarter of 2001. Full-year profit for 2001 is projected to be down 10-15%. For 2002, Caterpillar anticipates flat to slightly positive worldwide industry sales and aims for company sales to perform at least as well. Significant investments in systems initiatives, including 6 Sigma, a global HR management system (PeopleSoft), e-business platforms (Trade Matrix, Value Chain Accelerator), and a redesigned Dealer Business System (DBS_i_), are underway to support future growth and cost reduction objectives.
Key Highlights
- 1Third Quarter 2001 sales and revenues reached $5.06 billion, an increase driven by higher sales volume in Machinery & Engines and the Financial Products Division.
- 2Reported profit per share was 59 cents, down 5% from Q3 2000, but adjusted profit saw a modest increase excluding a prior year's tax benefit.
- 3SG&A expenses increased due to investments in special projects for future growth and long-term cost structure improvements, including 6 Sigma and acquisition-related costs.
- 4The company is expanding its Cat Rental Store network, with a significant increase in Cat Rental Store units and an overall increase in dealer rental fleet utilization.
- 5Electric Power business experienced continued growth, though at a slower rate than previous years due to weakness in the technology sector and West Coast energy market stabilization.
- 6Full-year 2001 profit is now projected to be down 10-15%, with the fourth quarter outlook showing more uncertainty than previously anticipated.
- 7Major systems investments are in progress, including 6 Sigma deployment, a new global HR system (PeopleSoft), e-business solutions, and the redesigned Dealer Business System (DBS_i_), aimed at achieving a $30 billion revenue target by 2006 and over $1 billion in cost reductions.