By James B. Kelleher and Scott Malone
NEW YORK/BOSTON | Thu Aug 19, 2010 7:01pm EDT
NEW YORK/BOSTON (Reuters) - Caterpillar Inc (CAT.N)'s new chief executive, Doug Oberhelman, confirmed the company's goal of more than doubling profit by 2012 and said he sees opportunities for more takeovers.
The world's largest maker of earth-moving equipment expects its revenue to reach $55 billion to $60 billion by 2012, and its profits to hit $8 to $10 a share, as long as the recovery holds, Oberhelman said on Thursday. The target matches what Caterpillar laid out to Wall Street a year ago.
The targets came at the start of Oberhelman's first formal meeting with analysts since taking the reins from Jim Owens, who retired in June after six years in the top job.
During the event, company executives said they believed there was little risk that the United States would slide back into recession.
"We don't think the world has ended," said Oberhelman, who has spent 35 years with the company. "We think there is going to be fantastic growth in our industries in the future."
The event, normally held at Caterpillar's headquarters in Peoria, Illinois, moved to the New York Stock Exchange this year and attracted about 150 representatives from sell-side and buy-side firms.
The company also confirmed its 2010 profit target of $3.15 to $3.85 a share. That forecast was issued in July and marked the second time this year the company raised its earnings view from an initial target of about $2.50 a share set in January.
Earlier on Thursday, Caterpillar reported that its dealers' sales of heavy equipment rose 32 percent in the three months ended in July, marking an acceleration over the past two months.
Its shares eased 46 cents, less than 1 percent, to close at $69.29 on a day the blue-chip Dow Jones industrial average .DJI, of which Caterpillar is a component, fell 1.4 percent.
M&A ON THE RADAR
Oberhelman also said the company thinks the time is right to make acquisitions and he saw many opportunities to do so.
Major takeovers have returned to investors' radar screen this week, with No. 1 global miner BHP Billiton (BLT.L) -- a big Caterpillar customer -- making a hostile $39 billion deal for leading fertilizer supplier Potash Corp (POT.TO) and No. 1 chipmaker Intel Corp (INTC.O) offering $7.7 billion for security software maker McAfee Inc (MFE.N).
Caterpillar's last big takeover was its $820 million cash buy of Electro-Motive Diesel, which makes railroad locomotives. That deal was agreed to in June and closed early this month.
During a roundtable with reporters, Oberhelman said that future deals were likely to focus on mining, energy and service businesses. He said he thought they would be small enough to be funded with the cash on Caterpillar's balance sheet, which totaled $3.7 billion at the end of the second quarter.
"We've never been in this position coming out of a recession," he said of the cash reserves. "So we've got strength we can use...We generate a lot of cash and as we improve our internal efficiencies, we're going to generate a lot more cash in the future.
"So we think that we have plenty of balance-sheet power and cash-flow power to do anything we want," Oberhelman said.
The maker of earth-moving equipment, locomotives and diesel engines and gas turbines has said it expects to further ramp up production throughout the second half and is hiring again after leading the industry in slashing staff last year, when sales took their largest one-year tumble since the 1930s.
It hopes to rehire 9,000 employees globally this year -- about a third of the workers it laid off last year.
Just this month, the company said it would expand its compact equipment plant in North Carolina and said it would break ground on a new hydraulic excavator plant in Texas and a new engineering design center in South Dakota.
Since the recession ended, the company has invested about $2.5 billion to fund M&A and expand its global manufacturing capacity.
Caterpillar shares have risen almost 55 percent over the past year, outpacing the 23 percent Standard & Poor's capital goods industry index .GSPIC.
(Reporting by James Kelleher, writing by Scott Malone. Editing by Robert MacMillan, Leslie Gevirtz)