(MCT) — PEORIA — Lifted by a solid sales performance from the big mining trucks and equipment built at its Decatur plant, Caterpillar announced Monday that 2012 was a record year for revenues and profit.
Peoria-based Caterpillar said it had sales and revenues of $65.9 billion, up 10 percent from 2011. Profit for the year hit $5.7 billion, up 15 percent on 2011's numbers and worth $8.48 per share.
But it wasn't all good news.
Fourth-quarter profit for 2012 was $697 million compared to $1.547 billion earned in the fourth quarter of 2011. Orders for the giant mining trucks built in Decatur and other mine-related machinery slowed in the fourth quarter of 2012 versus 2011, part of a decline that overshadowed the entire latter half of 2012.
Caterpillar slammed on the production brakes as 2012 faded and the resultant cutbacks were reflected in temporary layoffs at Decatur and other plants. However, because of the temporary cuts, inventories went down by a massive $2 billion in the fourth quarter.
The mining industry outlook for 2013 isn't that bright, either. Talking to financial analysts Monday, Caterpillar's director of investor relations, Mike DeWalt, said, "We expect sales in resource industries, which is mostly mining, to decline. As we said last October, mining customers have been lowering capital expenditure expectations for 2013 and the order levels have been very weak since the middle of 2012."
Fourth-quarter 2012 numbers showed Caterpillar's resource industries segment earned a healthy $611 million profit, but that contrasts with a profit of $997 million the company banked in the fourth quarter of 2011.
And one unexpected and embarrassing black eye that skewed the fourth-quarter numbers was the announcement that Caterpillar had to absorb a good will impairment charge of $508 million, or 87 cents per share, following the acquisition of a Chinese mining equipment maker. It turns out that the firm Siwei, which makes hydraulic mining roof supports, had inflated its profit numbers and hidden its cost figures with what Caterpillar chairman and chief executive officer Doug Oberhelman described as "deliberate multi-year coordinated accounting misconduct."
He said Caterpillar had only found out the books were cooked after it had completed the takeover of Siwei in June. Oberhelman said Caterpillar had since cleaned house of those responsible for the fraud and was now looking at legal options to try and recoup its losses.
Oberhelman, however, said he preached the gospel of corporate responsibility and he was the man responsible for the Siwei mess. "I recognize the decision to acquire Siwei happened on my watch and the buck stops at my desk," he said. "I am responsible for that acquisition."
As for Caterpillar's overall prospects for 2013, Oberhelman hedged his bets. On the one hand if the world economy continues to tick upward, it could be another record year. But then he added, "If, like the last two years, growth and confidence decline in the second half (of the year) 2013 could be a tough year," with shrinking profits.
But he said the company's management team were used to navigating their way through an intensely cyclical industry and stood ready to "execute and deliver." Asked by one analyst about the future of the mining segment of its business in particular, Oberhelman was decidedly upbeat.
He said the world economy, pushed by people in many developing countries anxious to advance their standard of living, would inevitably rise again and, when it did, it would be fueled by the products of the mining industry.
"I am still as optimistic as I've ever been on mining ..." he said. "Medium to long term, I am still really bullish on what I see for mining."
Caterpillar shares rose $1.87, or 2 percent, to close at $97.45 Monday.