Great results from Caterpillar (NYSE: CAT) today with a highly positive outlook suggests that AIM quoted Titan Europe (LON:TSW) , the maker of steel wheels and undercarriages for off highway vehicles, could also be benefiting; Caterpillar is a major client of TSW.
Caterpillar Inc. (NYSE: CAT) reported a third-quarter profit of $792 million, 96 percent higher than the third-quarter 2009 profit of $404 million. Profit per share was $1.22 (Consensus was $1.09), an increase from $0.64 per share in the third quarter of 2009. Sales and revenues of $11.134 billion were up 53 percent from $7.298 billion in the third quarter of 2009. Management commented that “Third-quarter results continue to demonstrate our focus on aggressively managing costs and improving cash flow, while continuing to ramp up production to meet customer demand. Continuing economic growth in the developing world has been key to improving sales. In addition, sales in developed countries have improved substantially after deep declines in 2009. While demand has increased, dealer new machine inventories and rental fleets have remained relatively flat, and the age of rental fleets hasn’t improved, and that should be positive for us as we move forward,” said Caterpillar CEO Doug Oberhelman.The outlook for 2010 sales and revenues is a range of $41 to $42 billion, an increase of 28 percent from 2009 at the midpoint of the range. The previous outlook range was $39 to $42 billion. The 2010 profit outlook is a range of $3.80 to $4.00 per share, an increase of 173 percent from 2009 at the midpoint of the range. The previous outlook range was $3.15 to $3.85 per share. 2010 is shaping up to be one of the most significant yearover-year increases in sales and revenues in our history.
Titan shares have been strong over the last 12 months and remain close to year highs of 82.5p (currently 80p), however, the latest news from Caterpillar suggests a stronger than anticipated outlook. Key issue for TSW remains management of debt.As at 30th June 2010 net assets were c£142m with tangible nets assets c£88m, after stripping out all those unquantifiable intangibles, equating to c106p per share.
