Caterpillar reported record first quarter 2006 sales and revenues of $9.39 billion and record first-quarter profit of $840 million, or $1.20 per share. Sales and revenues increased 13 percent, and profit per share was up 48 percent compared with the first quarter of 2005.
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"I'm very pleased with our performance in the first quarter; it's a great beginning to the year," says Caterpillar Chairman and Chief Executive Officer Jim Owens. "Our operating profit continues to improve as material costs were relatively flat, and we're realizing the cumulative benefit of price actions implemented over the last 18 months. Further, we are working to improve our production capability with better material flow from suppliers and a steady reduction in supply chain bottlenecks. Collectively, Caterpillar people are focused on execution in the areas of safety, product quality and inventory turns, and we're leveraging 6 Sigma in order to realize significant gains in these areas."
Sales and revenues increased $1.053 billion from the first quarter a year ago. Of the increase, $587 million was from improved price realization, $511 million was due to higher sales volume and $99 million was from higher Financial Products revenues. The effect of currency on sales was negative $144 million, primarily due to a weaker Euro.
First-quarter profit increased $259 million, or $0.39 per share, from first quarter 2005. The increase was largely due to improved price realization and higher sales volume, partially offset by an increase in core operating costs.
Caterpillar's first-quarter operating cash flow was $527 million, an increase of $348 million compared with the first quarter of 2005.
"Underlying business conditions and demand for our products continue to be strong," Owens says. "The fundamental strength of the industries we serve—notably global mining, infrastructure construction, oil and gas, and energy—continued to improve. These favorable market conditions, combined with Caterpillar people and dealers, allow us to serve customers with unparalleled product support and compete successfully in the global economy."
Caterpillar is raising its 2006 profit outlook to a range of $4.85 to $5.20 per share, up from $4.04 per share in 2005. The previous outlook forecasted 2006 profit in a range of $4.65 to $5.00 per share. The forecast for sales and revenues in 2006 is about $40 billion—unchanged from the prior outlook and up from $36.339 billion in 2005.
"Strong underlying fundamentals are in place, and we believe this is a business cycle that has staying power," Owens says. "With our enterprise strategy and 2010 goals in place, Team Caterpillar is fully prepared to take advantage of the continued robust demand in the markets we serve."