$CAT soars 6%+ pre-market after reporting better than expected earnings and committing to but back $18 billion in stock.
Caterpillar Inc. said its fourth-quarter earnings rose 44% on lower costs and improved sales in its construction and power systems businesses that offset a continuing decline in mining-machinery revenue.
The company forecast per-share earnings for the just-started year of $5.85 and sales of about $56 billion, plus or minus 5%. Analysts polled by Thomson Reuters expected per-share profit of $5.78 and revenue of $55.27 billion.
The company's board also approved a new $10 billion stock repurchase program. Caterpillar expects to repurchase $1.7 billion of its shares in the first quarter, which will complete its previous $7.5 billion stock repurchase authorization.
"The completion of our previous program and the decision to announce a new $10 billion program are a result of our record cash flow, the strength of our balance sheet and our confidence in the long-term future of Caterpillar," Chairman and Chief Executive Doug Oberhelman said.
Reduced spending by mining companies has taken a toll on sales of mining equipment, while Caterpillar's sales of construction equipment have benefited from a recovery of home building in the U.S. The heavy-equipment maker has been closing plants that make mining equipment and laying off workers to reflect a sharp drop in demand in the sector.
Caterpillar reported a profit of $1 billion, or $1.54 per share, up from $697 million, or $1.04 per share, a year earlier. Revenue decreased 10% to $14.4 billion. Analysts polled by Thomson Reuters expected per-share profit of $1.28 and revenue of $13.64 billion.
Overall, machinery and power-systems sales fell 11%.