August sales of the construction and mining equipment dealer Caterpillar Inc. (CAT) continued to show a positive trend for the three-month rolling period compared with the prior-year period. Caterpillar reported robust sales for the month of August 2010 with a 37% increase, riding high on robust sales reported in Latin America, North America and in EAME (Europe, Africa and the Middle East).
Higher sales in August 2010 resulted from a worldwide recovery in demand for construction and mining equipment. Sales for the three-months ended August 2010 were higher than 32% recorded in the period ended in July, 22% in June and 11% in May, 2010. All of Caterpillar’s operational regions reported growth on a sequential basis besides Asia/Pacific.
Regional Sales
Sales in Latin America increased a sharp 57% year over year in August, following a substantial 32% rise in July sales, attributable to vigorous mining activities in that region.
North American August sales, sustaining its growth momentum, clocked a 40% improvement from the year-ago period. Sales reportedly improved 38% in July and 26% in June.
Sales in EAME grew 26% in the period, accelerating from 19% and 8% growth rates in July and June, respectively.
Sales from Asia/Pacific improved 32% in August from the year-ago period. However, the rate of growth slowed down from 41% and 36% which the company reported for July and June, respectively.
Sector Analysis
Analyzing the business performance, sector-wise, Caterpillar saw sales in reciprocating and turbine engines in the industrial segment soar by 43%; sales to the electric power unit rose 10%; and sales to the petroleum sector increased 5%. The marine sector continues to be the weak link, plunging 40% from the year-ago period.
Guidance
For fiscal 2010, Caterpillar expects revenues in a range of $39–$42 billion and earnings per share in a range of $3.15–$3.85. The Zacks Consensus Estimate for fiscal 2010 currently stands at $3.72.
Caterpillar also affirmed its earlier guidance of revenue in a range of $55–$60 billion and earnings per share in a range of $8–$10 for fiscal 2012.
We appreciate the steady improvement in Caterpillar’s monthly sales thus far in 2010, with sales turning positive from May 2010 onward. The overall growth across the company’s operational base reflects a global turnaround in mining and construction activities, necessitating a rising demand for equipment.
Caterpillar currently retains a Zacks #3 Rank (short-term Hold rating).
Based in Peoria, Illinois, Caterpillar is a manufacturer and seller of construction and mining equipment, industrial gas turbines and diesel and natural gas engines to consumers worldwide.
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