Caterpillar Inc. said Thursday that its profit for the second quarter nearly tripled but warned that its second-half earnings won`t match the first- half results.
Earnings for the period ended June 20 rose to $139 million, or $1.41 a share, from $50 million, or 51 cents a share, a year earlier.
Sales increased about 21 percent to $1.99 billion from $1.63 billion a year earlier. The company said the sales gain reflected a pick-up in demand and inventory stockpiling by dealers hedging against a possible United Auto Workers strike against Caterpillar.
The UAW ratified a 28-month contract with Caterpillar Tuesday.
”It`s another good news day for Caterpillar, but there`s a lot of hard work ahead,” George Schaefer, Caterpillar`s chairman and chief executive, said at a press conference in the company`s headquarters here.
Caterpillar said the fear of a strike by the UAW pushed ”a significant but indeterminable amount of sales” into the first half. As a result, the company said, sales and profits will fall in the second half from first-half levels as dealers reduce their higher-than-usual inventories.
Len Kuchan, Caterpillar`s treasurer, said: ”It`s extremely difficult to separate strike-hedging from normal seasonal build-up of inventory.”
Kuchan also pointed out that the company`s tax rate will increase in the
second half from the first-half level because its tax-loss carryforward credits have been almost exhausted.
For the first six months of 1986, Caterpillar had a profit of $250 million, or $2.54 a share, in contrast with a net loss of $20 million a year earlier. Sales rose 20 percent to $3.72 billion from $3.11 billion in the 1985 first half.
The second-quarter performance met Wall Street analysts` expectations.
The company said inventory reductions boosted pretax profits by $35 million in the latest quarter compared with $70 million a year earlier.
The construction equipment company said prices improved 4 percent in the second quarter, but ”almost entirely” in Europe. Schaefer noted that price competition with Caterpillar`s archrival, Komatsu Ltd. of Japan, remains intense in the U.S. despite the dollar`s sharp drop against the Japanese yen. Schaefer said Caterpillar`s sales have picked up more than expected, par- ticularly in the U.S. In the second quarter, the company`s domestic sales rose 15 percent, and foreign sales gained 30 percent. However, sales fell in most of the Middle East and Far East and several major European countries.
Caterpillar also credited its cost-reduction efforts for boosting profits in the second quarter and first half. Labor costs fell because of a reduction of more than 1,200 salaried positions and a decrease in pension expenses.
