TORONTO (miningweekly.com) – American mining equipment manufacturer and financier Caterpillar has reported a sharp increase in first-quarter profits despite lower sales, as restructuring effort over the past 12 months gained traction.

For the three months ended March 31, the NYSE-listed firm improved profits by 20% to $1.11-billion, compared with $922-million in the comparable period of 2014. On a per-share basis, profit rose 26% to $1.81, an increase from profit per share of $1.44 in the first quarter of 2014.

The first quarter included the negative impact of $0.05 a share for restructuring costs, compared with $0.17 a share in the first quarter of 2014. Excluding restructuring costs, profit a share was $1.86, up from $1.61 a share previously.

First-quarter sales and revenues were $12.7-billion, down about 4% from first-quarter 2014 sales and revenues of $13.24-billion.

Profit in the period included a pre-tax gain of $120-million, or about $0.14 a share, from selling Caterpillar’s remaining interest in the company’s former third-party logistics business. Caterpillar sold a majority interest in the business in 2012 and divested the remaining interest earlier this year.

“We delivered solid results for the first quarter of this year, including higher profit than in the first quarter of 2014. Our focus on operational improvement, including lean manufacturing and cost management, is helping in what is a tough time for some of our important cyclical businesses.

“We continue to improve safety, quality, inventory turns, delivery performance and market position,” Caterpillar chairperson and CEO Doug Oberhelman said.

He noted that the first quarter was not without its challenges, which were reflected in overall sales and revenues being off about 4% from the first quarter of last year, while mining remained weak and construction was down in most regions.

“On the plus side, Energy & Transportation turned in another great quarter, although we don’t expect this to continue owing to the oil-related portion of the business,” Oberhelman forecast.

Caterpillar explained that its balance sheet remained strong and that the Machinery, Energy & Transportation division’s operating cash flow was more than $1-billion.

In line with the company’s priorities for cash deployment, it repurchased $400-million in common stock in the first quarter under the $10-billion repurchase authorisation the board approved last year. The company expected to continue this programme this year, driven by its cash flow and capital expenditures outlook.

Oberhelman advised that Caterpillar continued to face headwinds and uncertainty in 2015 and its outlook for the year reflected that. "We expect sales and profit in each of the remaining three quarters of 2015 to be lower than the first quarter," he said.

While the company expected sales and revenues to remain flat at about $50-billion this year, its outlook for profit a share had improved slightly.

The company now expected profit a share to hit about $4.70 or $5, excluding restructuring costs. The previous profit a share outlook was $4.60, or $4.75, excluding restructuring costs.

It forecast that restructuring costs would now total about $250-million, $100-million higher than the previously expected, with the increase mainly related to facilities that produced mining products.

As a result of restructuring programmes, Caterpillar had retrenched about 3 257 full-time employees in the last 12 months, replacing some of them with 772 temporary workers.

Meanwhile, Cat Financial also reported first-quarter 2015 revenues of $689-million, a decrease of $22-million, or 3% compared with the first quarter of 2014. First-quarter 2015 profit after tax was $133-million - a $2-million, or 2%, increase from the first quarter of 2014.