Caterpillar Inc’s Q4 earnings beat estimates but revenue declines, shares down 4%

American construction and mining giant Caterpillar Inc. reported fourth-quarter earnings that exceeded analysts’ expectations but posted a decline in revenue. The company’s shares fell 4% in pre-market trading on Thursday, January 30, and remained over 4% lower after the market opened.

Revenue and profit performance

Caterpillar Inc. recorded fourth-quarter revenue of $16.2 billion, reflecting a 5% year-on-year decline. According to the company, the drop in revenue was primarily due to lower sales volumes, driven by reduced equipment sales to end users and changes in dealer inventories. Operating profit for the final quarter of 2024 also fell by 7% to $2.924 billion.

The company reported a profit per share of $5.78 in the fourth quarter, up from $5.28 in Q4 2023. Adjusted profit per share stood at $5.14, surpassing analysts’ forecasts of $5.06. This figure excluded mark-to-market gains related to pension and post-employment benefit (OPEB) plan remeasurements, as well as a discrete tax benefit from a change in tax law concerning currency translation.


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Business segments’ performance

In its business segments, sales in Caterpillar’s Construction Industries division dropped 8% year-on-year to $6 billion. Meanwhile, sales in Energy & Transportation remained relatively flat at $7.65 billion, while Resource Industries saw a 9% decline to $2.96 billion.

For the full year 2024, Caterpillar reported a 3% decrease in sales and revenues, totalling $64.8 billion. However, this decline was partially offset by a favourable price realisation of $1.2 billion, according to Investing.com. The company ended the final quarter with $6.9 billion in enterprise cash.

CEO’s statement on rarnings

Caterpillar’s CEO, Jim Umpleby, expressed pride in the team’s performance in 2024, highlighting record adjusted profit per share and strong ME&T free cash flow. He added that as the company marks its centennial year, it remains committed to executing its strategy, serving customers, and investing in long-term profitable growth.

Caterpillar Inc.’s 2025 outlook

The company has cautioned that sales may decline slightly in 2025 due to inflation and high borrowing costs affecting demand, according to Reuters. Caterpillar expects its adjusted operating profit margin in the first quarter of 2025 to be lower than the previous year.

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FAQs

1. How much did Caterpillar Inc. spend on dividends in 2024?
The company allocated $2.6 billion for dividends and $7.7 billion for repurchasing Caterpillar common stock.

2. What is driving lower sales volumes in construction machinery and equipment?
Uncertainty surrounding government spending on infrastructure under the Trump administration has led contractors to adopt a cautious approach to buying new equipment.