Caterpillar Posts Record Profit, Lifts Forecast

Caterpillar posted earnings per share that set a record for the second quarter on Monday and raised its forecast for the full year. The heavy equipment maker and exporter said it would offset a large profit hit during the second six months of 2018 from trade tariffs through raising its prices.

In a prepared statement, Caterpillar CEO Jim Umpleby announced that the company had delivered record profit per share for the second quarter. The statement added that based upon the strong results from the first six months of 2018 and continued strength in many end markets, Caterpillar would raise its profit outlook for the rest of the year.

The heavy equipment maker posted earnings per share of $2.82, for the best EPS during the second quarter for the company, which is based in Illinois. It was over double that of the same period one year ago, while adjusted earnings per share were $2.97 or close to twice that of the same period in 2017. Revenue for the quarter was $14.01 billion while analysts were expecting $13.89 billion.

Caterpillar increased its profit forecast for the full year to between $11 a share and $12 a share, which is equal to an increase per share of 75 cents for an earlier released forecast.

The company released a higher forecast even though rising costs from tariffs, with Caterpillar announcing that it expects to have an impact of between $100 million and $200 million on material costs for the second six months of 2018. Caterpillar also said it would be offsetting those impacts by increasing prices this year.

CEO Umpleby said that the company’s business in China was continuing to show strength and an impact has yet to be felt from trade tensions.

Following the release of results, Caterpillar shares rose by 1.3%. For the year, shares of Caterpillar are down 10%.

The company repurchased over $750 million of stock during the 2018 second quarter, following repurchases of $500 million during the 2018 first quarter. The same pace of stock repurchases is expected for the third quarter.

The company authorized a quarterly dividend increase lifting the payout 10% to 86 cents a share.

Since CFO Brad Halverson said that the company’s earnings for the first quarter were its high-water mark for 2018, investors remained caution with Caterpillar shares, but that could change with the latest release of quarterly results.