Caterpillar Inc beat market expectations on earnings for the results in the second quarter driven by a good demand in the global equipment market. The company also upgraded its profit outlook for the complete the year.
An adjusted profit of $2.97 a share for the second quarter of the year compared to $1.49 a share for the same period last year was announced by the Deerfield, Illinois-based company. The markets were expecting average earnings of $2.73 a share.
The company also reported net profit at $2.82 per share fro4r the second quarter compared to $1.35 for the same quarter last year.
The company now expects adjusted profit per share to be between $11.00 and $12.00 in 2018, compared with $10.25 to $11.25 projected earlier.
There was a rise of 3.4 per cent in pre-market trading for the shares of the company.
The global economy that is passing through its bets phase since 2011 has benefitted the company whose results and performance is recognized to be a bellwether for global economic activity.
Revenues form sale jumped 24 per cent for the quarter at $14 billion buoyed by double-digit growth throughout all of its markets.
There was a 39 per cent rise in the sale of the company in the Asia-Pacific region and the revenues from this region accounted for one fourth of the company revenues. Enhanced construction activity and infrastructure investment in China helped the company’s cause in the region. S stronger Chinese yuan also gave a lift to the company.
The company mentioned that it was taking orders for equipment to be delivered to the oil and gas and mining industry in 2019.
Despite this, the company has been facing headwinds because of the enhancing trade wars and increasing pressure on costs. The company stock has fallen by almost 18 per cent since the beginning of the year and touched its lowest point last month since late October. The shares recovered later.
However, Caterpillar said that there can be am additional costs of up to $200 million for the second half of the year primarily because of U.S. import tariffs which could increase the material costs for the company. The company is also anticipating continued challenges in its supply chain resulting in pressure on freight costs.
However, the price increases it carried out on July 1 and cost discipline were the measures that the company plans to primarily offset most of these headwinds in the future.
(Adapted from Reuters.com)