Analysis of Caterpillar's global business in 2006

2022-08-18
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Introduction to the analysis of Caterpillar's global business situation in 2006: in 2006, Caterpillar's annual sales revenue increased by 14% and earnings per share increased by 28%. It is expected that 2007 will be the fourth year of record sales and profits. In 2006, caterpillar has achieved double-digit profit growth for four consecutive years, and its sales and profits have set a record for three consecutive years. This year

in 2006, Caterpillar's annual sales revenue increased by 14% and earnings per share increased by 28%. It is expected that 2007 will be the fourth year of record sales and profits

In 2006, caterpillar has achieved double-digit profit growth for four consecutive years, and its sales and profits have set a historical record for three consecutive years. This year's sales led to employment income of 100000 people reaching US $41.517 billion, achieving a profit of US $3.537 billion and earnings per share of US $5.17, an increase of 28% over the same period in 2005

among the $5.178 billion increase in sales revenue, of which $3.321 billion came from the increase in sales, $1.442 billion from the increase in financial revenue, $315 million from the increase in financial revenue, and $78 million from exchange gains

the profit in 2006 increased by $683million compared with the same period in 2005, mainly due to the increase in price realization and sales volume, and part of the increased revenue was offset by higher core operating costs. The proportion of operating profits of machinery and engines in sales revenue increased from 10% in 2005 to 12%

the operating cash flow of machinery and engines reached US $4.613 billion, a record high for the company, an increase of US $1.803 billion over 2005. Strong cash flow allows the company to increase capital expenditure. It acquired progress rail, which increased its quarterly dividend by 20% and repurchased 45.6 million yuan of shares

1 sales revenue by Region

caterpillar divides the global market into four regions: North America, eame (Europe, Africa, the Middle East and CIS countries), Latin America and the Asia Pacific region. Among them, North America is the most important market region, with sales revenue accounting for more than 50%. In 2006, the sales revenue of Latin America was US $3.841 billion, with a year-on-year increase of 22%, which was the fastest growing among the four regions, accounting for 9.25% of the total, an increase of 0.55 percentage points from 8.7% of the previous year. The sales revenue of the Asia Pacific region was US $5.005 billion, with a year-on-year increase of 9%, the smallest increase among the four regions, accounting for 12.06% of the total, a decrease of 1.69 percentage points from 13.75% in 2005

2 product sales in regional markets

(1) mechanical products

in 2006, the sales of machinery in all regional markets of Carter increased, reaching US $26.062 billion, an increase of US $3.131 billion or 14% over 2005, of which the increase in sales contributed US $2.081 billion; Price realization increased by $996 million; Exchange gains increased by $54million

(2) engine

engine sales reached US $12.807 billion, with a year-on-year increase of US $1.732 billion, an increase of 16%, of which the increase in sales contributed US $1.24 billion; Price realization contribution of $468million; Exchange gains increased by $24million

(3) income from financial products

the income from financial products was $2.648 billion, an increase of $315 million or 14% year-on-year

3 operating profit

in 2006, the operating profit was $4.921 billion, an increase of $1.137 billion or 30% over the same period in 2005, mainly due to the increase in product prices and the increase in the structure and requirements of tensile testing machine fixtures, partially offset by higher core operating costs

the core operating cost in this year increased by $1.261 billion over 2005, of which $650million came from the rise in manufacturing costs (manufacturing costs include period costs and variable costs related to product manufacturing). The increase in manufacturing costs during the period was mainly due to the increase in production, including the increase in production, the increase in machine tool maintenance costs, and the increase in facility support and logistics business. The rise in variable manufacturing costs was mainly affected by higher material costs. Non manufacturing core operating costs increased by $611 million, mainly due to the increase in sales, general and administrative expenses and R & D expenses

by business, The machinery business is still the main component of Caterpillar's operating profit. Zhang Weidong, deputy general manager of Ningbo Haixiong Plastic Machinery Co., Ltd., said: "Now the living standard has improved. This year, the operating profit was $3.027 billion, an increase of 25% year-on-year, accounting for 61.51% of the total operating profit, down 2.73 percentage points from 64.24% in 2005. The operating profit of engine business was $1.630 billion, an increase of 52% year-on-year, accounting for 33.12% of the total operating profit, an increase of 4.82 percentage points from 28.30% in 2005. The operating profit of financial products was $670 million, an increase of 26% year-on-year, accounting for the total operating profit 13.62% of the total, a slight decrease of 0.41 percentage points from 14.03% in 2005

in terms of the composition of growth, the $596million increase in machinery business was mainly from the improvement of price realization and increased sales, but the increase in core operating costs offset most of the increased revenue. The composition of the increase in engine business is the same as that of machinery business, mainly due to the improvement of price realization and increased sales, but the increase in core operating costs offset most of the increased revenue

4 Outlook 2007

Owen, chairman and CEO of caterpillar, said that although the demand of the two major market areas of caterpillar, North American highway vehicle engines and the U.S. real estate industry, will decline in 2007, and dealers will also reduce inventory, caterpillar will still make every effort to make 2007 another good year for the company's operation, and earnings per share will continue to grow, And the growth rate should be greater than the growth rate of sales revenue. The main measure to achieve all this is to focus on cost management

Owen believes that after 2007, Caterpillar's performance will have a greater breakthrough than in the past two years. The company's investment in new products will enable Carter to have the most powerful product line in history. In addition, Carter will continue to invest in expanding global facilities, increasing production capacity and improving operations. Quality, speed, process optimization using Six Sigma and employees are the basis of the company's strategy. Through the effective implementation of the strategy, the company's sales revenue will exceed $50billion by 2010. From 2005 to 2010, the annual compound growth rate of earnings per share will reach 15% to 20%. At that time, shareholders will get greater returns

it is estimated that the sales revenue in 2007 will increase by 5% over that in 2006, ranging from 41.5 billion to 43.6 billion US dollars; Earnings per share are expected to be $5.20 to $5.70, an improvement from $5.17 in 2006; Due to improved profits and declining inventories, it is expected that the operating cash flow of machinery and engines will further increase from $4.613 billion in 2006

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