Caterpillar CAT posted much stronger-than-expected third-quarter earnings Tuesday, thanks in part to higher construction equipment demand linked to the ongoing support from government infrastructure spending.
Shares in the group traded firmly lower in early dealing, however, as investors focused on the sequential slowing in revenue gains across Caterpillar's three reporting segments as well as as a shrinking order backlog while noting ongoing weakness in China.
Caterpillar said adjusted profit for the three months ended in September was pegged at $5.52 a share, up nearly 40% from the year-earlier period and well ahead of the Wall Street consensus forecast of $4.79 a share.
Group revenue, Caterpillar said, rose 12.1% to $16.8 billion, topping analysts' estimates of a $16.52 billion tally. Operating-profit margin was 20.5% for the quarter, well ahead of the 16.2% tally recorded a year earlier but narrowed from 21.1% over the three months ended in June.
"I'd like to thank our global team for delivering another great quarter, as demonstrated by double-digit top-line growth, strong adjusted operating profit margin and robust ME&T free cash flow," Chief Executive Jim Umpleby said in a statement. "We remain focused on supporting our customers' success and executing our strategy for long-term profitable growth."
Caterpillar shares were marked 6.3% lower in late-day Tuesday trading following the earnings release to change hands at $226.86 each.
Construction sales were up 12% from a year earlier to $37 billion, Caterpillar said, but were down 2.2% from the prior quarter. Lower sales in Latin America and Asia were "driven by lower sales of equipment to end users, partially offset by the impact from changes in dealer inventories."
Resource industry sales were up 9% to $3.35 billion thanks to "favorable price realization, partially offset by lower sales volume," but were also down 6% from the prior quarter.
Energy and Transportation rose 11% from a year earlier to $6.86 billion, but were down 5% from the three months ended in June.
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