The Noteworthy Trends From Caterpillar’s Q4 Earnings Beat
Caterpillar (NYSE: CAT) reported strong earnings this week, ending the year on a strong note. Caterpillar grew consistently throughout 2017, comfortably beating estimates in each quarter. Net revenues for the fourth quarter grew to $12.9 billion (+35% year-on-year), while its adjusted EPS rose sharply from 83 cents in Q4’16 to $2.16 in Q4’17. Strong performances in key markets such as construction equipment and onshore oil & gas equipment propelled Q4 earnings. Below, we have summarized the major takeaways from Caterpillar’s Q4 earnings using our interactive dashboard.
Construction, Resource, Energy & Transportation Industries Drive Overall Performance
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The Construction segment accounts for nearly 42% of Caterpillar’s overall revenue and was up 47% year-on-year to $5.3 billion in Q4’17. The robust performance of this segment was primarily due to strong end-user demand for construction equipment across regions – especially North America and China – and the favorable impact of changes in dealer inventories. Caterpillar is upbeat about its growth prospects for 2018, driven by the recovery in the Middle East/Africa and Latin America market, and strong improvement in the North American market driven by the potential U.S. infrastructure bill.
Resource Industries segment revenue saw consistent growth throughout the year and rose sharply by 53% in Q4 to $2.2 billion, primarily driven by strong end-user demand for equipment and aftermarket parts, and favorable price realization. We expect this segment to grow further in 2018, driven by increased commodity prices, continued global economic momentum and strong global demand for heavy construction.
The Energy & Transportation segment accounts for nearly 35% of the overall revenue and was up 22% year-on-year to $4.7 billion in Q4’17. The strong performance of this segment was primarily due to the surge in demand for equipment used in gas compression and well servicing in North America, increased rail traffic, and due to additional deliveries of freight locomotives, and strong demand for equipment used in electric power and agricultural end-user applications and aftermarket parts in EMEA. Caterpillar expects a mixed 2018 for this segment, experiencing growth opportunities in oil & gas applications, power generation, and transportation, while the locomotive and marine business are expected to remain under pressure.
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