Caterpillar reported record second-quarter profit on strong demand for its equipment from the oil, gas, and mining sector while raising its full-year outlook for a second straight quarter despite rising costs due to tariffs.
The heavy equipment maker said Monday that demand for oil, gas, and mining machines is so strong that it was taking orders for delivery well into 2019. At the end of the second quarter, its order backlog was $17.7 billion, up about $200 million from the first quarter.
“A strong global economy … is helping manufacturers like Caterpillar book more orders and deliver higher profits despite growing cost pressures,” Reuters noted.
For the latest quarter, Caterpillar earned an adjusted $2.97 per share — nearly double from a year ago — on revenue of $14.01 billion, beating analysts’ estimates for earnings of $2.73 per share and revenue of $13.89 billion.
The Asia-Pacific region accounted for nearly a quarter of company revenues, with equipment sales up 39% from a year ago, helped by increased construction activity and infrastructure investment in China. In North America, robust oil prices are supporting demand for well-servicing and gas compression applications.
“Our business in China continues to be strong. We haven’t seen an impact of the trade tension on our business,” CEO Jim Umpleby said in an earnings call with investors.
Caterpillar said tariffs could inflate material costs in the second half of the year by up to $200 million and it also expects supply chain challenges to continue to pressure freight costs. But the cost increases are being offset by price increases and through cost discipline.
For the full year, the company now forecasts adjusted profit per share in a range of $11 to $12, compared with $10.25 to $11.25 projected earlier.
“Based on outstanding results in the first half of the year and continued strength in many of our end markets, Caterpillar is again raising our profit outlook for 2018. We remain focused on operational excellence, cost discipline and investing for long-term profitable growth,” Umpleby said in a news release.