Caterpillar, the world's biggest manufacturer of construction and mining equipment, said Friday its fourth-quarter revenue jumped to $11 billion, but also projected essentially flat revenue for 2007.
The company earned $882 million in the fourth quarter, up from $846 million a year earlier, helped by improved price realization and higher sales volume, despite an unfavorable geographic/product mix of sales. The company added, though, that the increase was largely offset by higher core operating costs.
CAT said its full-year results marked the fourth consecutive year it had grown profits by double digits, and the third straight year of record sales and profits. The company posted 2006 revenue of $41.5 billion and profit of $3.54 billion.
"What Team Caterpillar was able to accomplish in 2006 is a reflection of the diversity of the industries we serve, the global need for our products and services and the strength of our partnership with our dealers and suppliers," said Chairman and Chief Executive Officer Jim Owens. "We took advantage of our financial success — including strong cash flow — to fund growth in capacity, continue aggressive new product development, complete the strategic acquisition of Progress Rail, increase the dividend rate by 20 percent and buy back more than $3 billion in stock. These actions will deliver long-term benefits for our customers, employees and stockholders."
For 2007, the company expects revenue in a range of $41.5 billion to $43.6 billion, which is flat to up 5 percent from 2006.
"I'm anticipating great things for Caterpillar in 2007. Despite a sharp decline in two key North American industries— on-highway truck engines and U.S. housing — and an expected reduction in dealer inventories, we are projecting another record year in 2007," Owens said. "We expect to improve profit per share at a higher rate than sales and revenues, and that means a key focus in 2007 will be cost management."
Owens said the company continues to invest in its facilities around the globe to add capacity and improve operations.
"Quality, velocity, process excellence with 6 Sigma and engaged employees are the foundations of our strategy to deliver financial results through the end of the decade that should be very rewarding to our stockholders," he said, adding that the company projects revenue in excess of $50 billion and compound annual growth in profit per share of 15 to 20 percent from 2005 to 2010.