Caterpillar Retail Sales Post Longest Winning Streak In 51 Months

Caterpillar's great depression ended four months ago, when in March following a record 51 consecutive months of annual declines, its global retail sales posted the first, if modest, monthly increase growing by 1% on the back of a surge in Chinese and other Asia/Pac sales. Since then the trend has accelerated, and in June the company reported that Asia Pac sales rose by 40% Y/Y, which however appears to the next cyclical slowdown following increases of 46%, 47% and 49% in the March-May period. Just as notably, retail sales in the US rose by 2% again, the best performance since May 2015.

The result is that CAT's global sales have posted the longest positive streak in 51 months, and appear to have put the 4+ year depression in the read view mirror - even if Asian retail sales appear to be slowing once again - and are levitating higher, although as we said last month, just like during the 2011/2012 downturn, it all depends on how "hard" China's economic slowdown will be over the coming year.

Finally broken down by component, it was a mixed picture with weakness re-emerging amid transportation equipment:

  • Power Gen: -7%, after down -10% in April
  • Industrial: +10%, after up +4%
  • Transportation:-7%, after up +8%
  • Oil & Gas: +6%, after down -13%

And while construction industries (thanks China housing) were broadly higher, up 10% in June, a modest decline from May's 11%, resources - i.e., E&P and others, continue to languish, and were again down 1% in June, following a -3% drop in May, which however was an improvement from the 19% drop in both March and April as commodity producers appear to be finally spending more on capex.

Comments

adr Mon, 07/24/2017 - 09:34 Permalink

I find it odd that CAT posts sales increases only after its offices are raided. Were the declines in sales used to mask some funny business in the books? Or did CAT get the all clear to mark even more fantasy on the ledger? I find it odd that all of a sudden China would start buying up Caterpillar machines when they were buying Asian machinery like mad the past few years. Did one of the Asian heavy equipment suppliers go out forcing them to buy Caterpillar? 

Silver Savior Mon, 07/24/2017 - 09:40 Permalink

I just find it crazy they are having an uptick the same time the economy is going to hell. Then I have to think about how much better things are in Asia. I guess we are just the next third world country.

Stormtrooper Mon, 07/24/2017 - 09:42 Permalink

I thought the Chinese only ever bought one of each model and then reverse engineered/built them in their own factories.  How does Cat claim such high sales there?

silverer Mon, 07/24/2017 - 09:58 Permalink

I have to wonder why the sales went up. Did CAT's competitors also see this surge? Anyone here remember the mudslide that happened in that Chinese province where Apple has its manufacturing, I think Shenzhen? There was a picture from the air taken, and I'll never forget how many machines they had there the next day to dig. I must have counted over a hundred. Impressive they could get that many there so fast.

OhNo (not verified) Mon, 07/24/2017 - 10:09 Permalink

Gotta have machines to mine that gold, My work as a underground gold miner in OZ has picked up alot.

logicalman Mon, 07/24/2017 - 11:03 Permalink

Drowning for 4 years, head above water for a couple of months.Looks like a last gulp of air before finally sinking to the bottom, given the state of the world's economies.

theprofromdover Mon, 07/24/2017 - 11:24 Permalink

-and you don't think it is an accounting scam?They had to stop buying their own shares, it was too obvious.Fantasy sales based on dirty lease-terms, Shirley; or is there a new small-print tax-break just for investors looking to buy assets for the rental market? 

big rock Mon, 07/24/2017 - 13:03 Permalink

Not true........absolutely not true. Caterpillar is converting new equipment inventory on their dealer lots to Cat Rental equipment inventory and booking it as a sale to the dealer. There is no recovery in whole goods final, actual, sale to a customer.