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Caterpillar 4Q adjusted profit rises, outlook calls for decline in 2020

Kitco News

(Kitco News) - Heavy machine manufacturer Caterpillar Inc. (NYSE: CAT) reported a rise in fourth-quarter adjusted earnings Friday even though sales and revenue fell, but projected that its adjusted profit will decline in 2020.

The company listed fourth-quarter adjusted earnings per share of $2.63, down from $2.55 in the same period a year earlier but above the Refinitiv estimate of $2.37. Sales and revenue fell 8% to $13.1 billion from $14.3 billion.

“In the fourth quarter, strong cost control more than offset lower-than-expected end-user demand,” said Jim Umpleby, chairman and chief executive officer, in a prepared statement. “Our margin performance reflected our diligent focus on maintaining a flexible and competitive cost structure.

“While sales declined modestly in 2019, we delivered an operating margin and free cash flow consistent with our long-term targets and continued to invest in services and expanded offerings. The team’s focus on executing our strategy for profitable growth also allowed us to increase our dividend by 20% and return more than $6 billion is capital to shareholders through dividends and share repurchases.”

For full-year 2019, sales and revenue slipped to $53.8 billion from $54.7 billion. The adjusted profit per share for the full year was $11.06, down from $11.22 in 2018.

The company listed a 2020 outlook calling for the adjusted profit to be between $8.50 and $10 per share. Wall Street was looking for $10.55.

“We expect continued global economic uncertainty to pressure sales to users in 2020 and cause dealers to further reduce inventories,” Umpleby said. “We have improved our lead times and remain prepared to respond quickly to any positive or negative changes in customer demand.”

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