Mark Szakonyi, Daily Content Editor | Oct 26, 2011 4:28PM EDT
Caterpillar expects sales to increase 10 percent to 20 percent next year, but says sales growth in China will slow from double-digit to single-digit expansion in 2012.
That's not necessarily a bad thing, said Douglas Oberhelman, chairman and CEO of the construction and mining equipment giant.
The slowdown “we have seen in the economy as the Chinese authorities have tried to get a hold of inflation, in my view, is the best thing that could have happened to the construction equipment industry,” Oberhelman said. If left unchecked, he said China’s growth would have caused a massive bubble.
Caterpillar’s sales in China will increase between 8-10 percent annually, down from the current levels of 15-20 percent, Oberhelman told investors Monday. Caterpillar declined to say what size market share it had in China but did say sales have outpaced the overall equipment industry, according to a transcript of the call by Seeking Alpha.
The Peoria, Ill-based company’s profit rose 44 percent year-over-year in the third quarter to $1.14 billion on a 41 percent jump in revenue to $15.7 billion. The company says its expects between $63.8 billion and $69.6 billion in revenue in 2012. Caterpillar said it will end 2011 with about $58 billion in revenue.
Expectations for growth rest largely on the company’s belief that developing countries will continue to expand their economies, albeit at a slower rate than in 2011.
“In the U.S., we still expect continuing poor housing, a little better than this year but still very weak. We are also not factoring in any new highway build, but we are encouraged that it seems to be gaining some traction in Washington,” said Mike DeWalt, director of investor relations. Oberhelman is a major propoent for investing in U.S. infrastructure.
Caterpillar’s third-quarter revenue was up in every geographic region with North America up 25 percent; Latin America up 20 percent, Europe, Africa and the Middle East up 41 percent; and Asia-Pacific up 38 percent.
-- Contact Mark Szakonyi at mszakonyi@joc.com. Follow him on Twitter @Szakonyi_JOC
