Caterpillar Inc. (CAT) reaffirmed its fiscal 2011 guidance and provided a very encouraging outlook for the coming year. According to the company, growth in the world’s population will eventually lead to the company’s expansion as demand for mining and construction equipment will naturally surge.
Caterpillar is expecting fiscal 2011 earnings to be approximately $6 per share on nearly $50 billion of sales. Officials also assert that the company is on its way to meeting the fiscal 2012 target of earnings in the range of $8 – $10 per share and revenue in the range of $55 billion – $60 billion. The projections for both the years are exclusive of the company’s recent acquisitions of Bucyrus International, locomotive maker Electro-Motive Diesel Inc. and German engine maker Motoren-Werke Mannheim.
For the future, Caterpillar’s key strategy will be adding sufficient capacity to meet demands along with cost control. The company has its expansion plans in place with projects in China and Brazil, besides building new plants in Victoria, Texas, and Winston-Salem, North Carolina.
Caterpillar recently announced that it intends to sell a part of its logistics business in order to concentrate more on its core business. This unit was created 24 years ago to market the company’s own parts-distribution. Hence, to evaluate the options for its third-party logistics business, Caterpillar has hired Bank of America, Merrill Lynch (MTTX) and Robert W. Baird & Co.
Caterpillar’s logistics business has operations in North America, South America, Europe and Asia. Caterpillar is yet to affirm its decision on its logistics business and expects to confirm it by the end of fiscal 2011.
During the last earnings, the company reported revenues of $42.6 billion and earnings of $4.15 per share.
Caterpillar currently retains a Zacks #3 Rank (short-term Hold rating).
Peoria, Illinois-based Caterpillar Inc. is the manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company is one of the few leading U.S. companies in an industry that competes globally from a principally domestic manufacturing base. Caterpillar operates three divisions – Machines, Engines and Financial Products. Caterpillar competes with the likes of CNH Global NV (CNH), Komatsu Ltd. and Volvo AB.
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