Caterpillar Performance Analyzing Report

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The main reason for low sales is low demand. The dropping demand of Resource Industries has the greatest influence on sales. For the world has a higher need of clean energy, the traditional resources producing methods will losing its predominance. Though the analyst of Caterpillar made the prediction that the world coal production will likely increase slightly with growth occurring in Asia, this condition won^ last long. We should decrease our input of the traditional resources industries.

- Second Quarter

The main action of the second quarter is they revised the outlook for 2013, which adjust the sales and revenues range from $57 to $61 billion to the range of from $56 to $58 billion, and the profit per share of $7.00 to $6.50. Also, in order to continuing cut the cost, Caterpillar temporarily shut down factories, rolling layoffs throughout much of the company, reduction in our flexible workforce and reduce discretionary and program costs.

Second Quarter 2013

Second Quarter 2013

Second Quarter 2012

$ Change

%Change

Machinery and Power Systems Sales

13886

16684

-2798

-17%

Financial Products Revenues

735

690

45

7%

4

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CAT Performance Analysis

Total Sales and Revenues

14621

17374

-2753

-16%

Profit

960

1699

-739

-43%

Profit per common share - diluted

1.45

2.54

-1.09

-43%

While sales declined in all geographic regions, the most significant reduction was in Asia/Pacific. The Asia/Pacific decline was primarily related to lower Australian mining sales in the Resource Industries segment. While sales in Asia/Pacific declined overall, sales in China increased. Sales decreased in all segments. The most significant decrease was in Resource Industries, with sales down 34 percent resulting primarily from changes in dealer inventory and weaker demand in mining. Construction Industries’ sales decreased 9 percent, and Power Systems’ sales were 5 percent lower.

Still, China remained a promising market. Even if the whole world’s market decreasing, China could provide great profit as usual. Compared with Resource Industries, the Construction Industries and Power Systems, sales are much better. Judging from the property of Power System, it could remain a stable sales amount, while the Construction Industries will have a greater chance of booming.

- Third Quarter

Caterpillar revised the 2013 outlook again for unexpected sales reduction. Now they expect sales and revenues to be about $55 billion, with profit per share of about $5.50. The previous outlook for 2013 sales and revenues made in the second quarter was a range of $56 to $58 billion with profit per share of about $6.50 at the middle of that range. The total revenue has declined 17 percent from 2012, with about 75 percent of the drop from Resource Industries, which is principally mining. Orders for new mining equipment began to drop significantly in mid-2012 and have continued at very low levels. As a result of weak orders and feedback from end users, the sales and revenues outlook provided in January of 2013 included a decline in mining sales. At that time, based on strong mine production for many commodities, the company’s outlook expected that order rates would improve later in 2013. Unfortunately, despite continuing strong commodity production, the order rates for mining machine still 5

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CAT Performance Analysis

keep going down. The original sales mix contains a high portion of mining products, which cause a severe decrease of sales revenue compared to the same period in 2012.

Caterpillar continues to reduce the inventory and improve the operational performance this year to deal with this difficult situation. Excluding the impact of inventory absorption, they have lowered costs about $700 million and reduced capital expenditures by about $400 million. In the preliminary 2014 sales and revenues outlook, Caterpillar finally gave more focus on the Construction Industries, which they wish could have more sales growth. And they also hope the Power Systems could have relatively flat sales and try to minimize the decline in Resource Industries9 sales.

Third Quarter 2013

Third Quarter 2013

Third Quarter 2012

$ Change

%Change

Machinery and Power Systems Sales

12678

15739

-3061

-19%

Financial Products Revenues

745

706

39

6%

Total Sales and Revenues

13423

16445

-3022