Caterpillar Reports Quarterly Loss, Says 2017 Sales Jumped 18%

Caterpillar Inc., the world's largest maker of heavy machinery, said Thursday that it broke a four-year streak of declining sales and signaled optimism about most of its construction and mining markets.

While the Deerfield, Ill.-based manufacturer didn't offer a revenue forecast for 2018, Caterpillar said it was kicking off the year with strong sales momentum and order rates.

Annual revenue jumped 18% to $45.5 billion in 2017, breaking four consecutive years of weak sales of Caterpillar's iconic yellow bulldozers, mining trucks and other equipment.

Caterpillar reported a loss for the fourth quarter, however, as it booked a $2.4 billion charge related to changes to the U.S. tax code that were signed into law by President Donald Trump in late December. Much of the company's charge stemmed from a mandatory tax on stockpiled overseas profit, which at the end of 2016 totaled $16 billion. Earnings excluding the tax charges and other items topped analysts' expectations.

Caterpillar shares fell 1.8% to $165.30 in morning trading Thursday.

"After four challenging years, many key markets improved in 2017, and our global team delivered strong results," Caterpillar Chief Executive Jim Umpleby said Thursday.

Caterpillar said the largest increase in sales came from North America amid growth in demand for its heavy machines and after-market parts. About half the sales growth in its Asia/Pacific region was attributed to China, due to increased building construction and infrastructure investment. Latin American sales increased as several countries' economies stabilized, Caterpillar said, although construction activity remained weak.

Mr. Umpleby, who took over his current job at the beginning of last year, has said a prime focus under his watch would be profitable growth, rather than only increasing revenue. The company's stock rose about 70% in 2017.

Caterpillar earlier this week said its rolling three-month average of global retail sales of its machinery rose 34% in December, up from 26% in November.

The company has said it would benefit in the long-term from a lower corporate tax rate, greater ability to access overseas cash and a more-equal playing field between it and foreign competitors. Its 2018 outlook assumes a 24% effective tax rate, lower than the 28% effective tax rate in 2017.

While the company pointed to the new tax law's benefits, Caterpillar's earnings report Thursday didn't address its Swiss subsidiary that is at the center of a tax structure that has been under criminal investigation.

Federal agents raided Caterpillar's headquarters and two other locations last year in the probe, which is focused on taxes and exports. The company hasn't been accused of wrongdoing and has said it believes its tax position is correct.

Overall for the fourth quarter, the company reported a loss of $1.3 billion, or $2.18 a share, compared to a loss of $1.2 billion, or $2 a share, for the year-earlier period.

Caterpillar's adjusted earnings were $2.16 per share in the fourth quarter, up from 83 cents the prior year.

Wall Street analysts expected fourth-quarter earnings of $1.50 per share, or an adjusted $1.79 per share, according to Thomson Reuters.

Caterpillar said it brought in $12.9 billion of revenue in the quarter, up 35% from $9.6 billion a year earlier. Analysts expected $12 billion.

The company continued hiring in the U.S. in 2017, a shift following years of deep cuts in its domestic workforce. Caterpillar said its domestic workforce stood at 50,500 employees at the end of last year, up from 45,700 at the end of 2016.

--Austen Hufford contributed to this article.

(END) Dow Jones Newswires

January 25, 2018 11:24 ET (16:24 GMT)