Shares of Caterpillar (CAT) are up 3% pre-market after the earth-moving company reported strong earnings and raised its outlook.
The numbers seem to be providing a lift to the overall market, but check out the internal numbers, and you see a WIDE disparity between what’s going on globally, and what’s going on domestically.
Not surprisingly, Caterpillar loves Asia Pacific and Latin America.
Asia/Pacific – Sales increased $469 million, or 40 per cent.
- Sales volume increased $356 million.
- Price realisation increased $94 million.
- Currency increased sales by $19 million.
- Dealers reported higher inventories compared with year-end 2009. In the first quarter of 2009, dealers reduced inventories. These changes in dealer inventories contributed to higher sales volume. Inventories were well below a year ago in both dollars and months of supply. Months of supply were below the historical average.
- Asian economies, particularly China and India, were the quickest to recover from the worldwide recession. Better economic conditions enabled dealers to report higher deliveries to end users than the first quarter of 2009.
- China accounted for most of the increase in sales as reported deliveries reached a record high. The government’s stimulus program and a 26-per cent increase in lending led to a 33-per cent increase in both residential and nonresidential construction.
- India’s record-low interest rates contributed to industrial production rising nearly 16 per cent, leading to a large increase in sales.
- Sales increased slightly in Australia. Residential construction improved, and higher metals and coal prices caused mines to increase output.
But now look at North America:
North America – Sales decreased $326 million, or 15 per cent.
- Sales volume decreased $361 million.
- Price realisation increased $34 million.
- Currency increased sales by $1 million.
- Dealer inventories were about half of the year-earlier level. As a result, months of supply ended the quarter well below a year earlier and in line with the historical average.
- Dealers reduced reported inventories during the first quarter of 2010, compared with increases during the first quarter of 2009. These changes in dealer inventories contributed to lower sales volume.
- Dealers reported modest improvements in monthly delivery rates since September 2009; however, deliveries during the quarter were below year-earlier amounts. Some industries have shown improvement, especially in Canada, but long, severe declines in activity have left users cautious about increasing machine purchases.
- The U.S. housing industry showed scattered signs of improvement with starts up 17 per cent from a postwar low in 2009 and new home sales increased 6 per cent. The Canadian housing industry rebounded vigorously, with starts up 48 per cent from the first quarter of 2009.
- U.S. nonresidential building contracting dropped 16 per cent from a year earlier. Commercial and industrial contracting dropped 42 per cent due to extended property price declines and low industrial capacity utilization.
- Highway contracting was up 36 per cent. Positives were increased funding from the U.S. government’s recovery program and the extension of existing highway legislation through the end of this year.
- Modest improvements in construction led to a 3-per cent increase in U.S. nonmetals mining and quarry production. Canadian producers increased quarrying output 3 per cent.
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