20.04.2008

CAT posts strong first quarter

Caterpillar, the world’s largest construction equipment producer has reported a strong increase in sales for the first quarter of 2008 and is anticipating another record year.

Overall sales revenues for the company, which produces a full range of equipment including telescopic handlers, grew by 18 percent to $11.8 billion.
Of this some $7.5 billion were new machines, an increase of 16 percent on the same period last year.

Pre tax profits at the company were $1.33 billion, an increase of 14 percent, reflecting that benefits from price increases and beneficial currency factors did not manage to offset rising costs. The company’s operating income on its machine division was down 13 percent.

Geographically North America was the slowest growing region with sales of machines up just three percent, with the Europe, Africa Middle East region posted a 27 percent rise. However most of this increase came from Eastern Europe, the Middle East and Africa. Western Europe was largely flat thanks to a decline in the residential construction market just about offset by increases in Non residential and infrastructure construction.

Russia and other ex CIS states contributed strongly to the European result, thanks to a 30 percent increase in construction spending in Russia.

Asia/Pacific was up 35 percent while South America increased by 18 percent.

CAT expects the full year to be up by five to 10 percent to reach a new record in terms of sales.

Vertikal Comment

CAT sales tend to be a bit of a leading indicator for cranes and access with their heavy concentration on primary earthmoving equipment. So all in all these numbers bode well for the products we cover, at least for the next 18 months or so.

The cost increases that CAT highlights suggest that we can expect to see further price increases for aerial lifts cranes and telehandlers this year. While this will of course not be welcomed, it will put a brake or limit on any panic discounting by manufacturers facing possible slower growth in the face of capacity increases and shorter lead times. This is only likely to apply to aerial lifts and telehandlers of course, sales of most crane types continues to outstrip supply with no sign of this abating