Cat Engines Now an $11 Billion Business

Posted on January 26, 2006

Caterpillar has announced its 2005 financials. Part of the Peoria, Ill. manufacturer's year-end numbers, was the news that engine sales were $11.075 billion in 2005, an increase of $1.583 billion, or 17 percent, from 2004. Volume accounted for $1.078 billion, price realization added $484 million and currency added $21 million, Cat reported.

For all of Caterpillar Inc., the company reported full-year sales and revenues of $36.339 billion, a 20 percent increase from 2004. This means that engine sales accounted for 30.47 percent of Cat’s total sales.

Further, Cat said dealer engine inventory increased during both full-year 2005 and full-year 2004. The 2005 inventory increase was less than the 2004 increase, which slightly reduced the company's year-over-year sales growth. Months of inventory relative to deliveries declined in most regions and sectors compared to 2004.

In specific geographic markets, Cat’s North America sales were up 17 percent. Sales of petroleum engines increased 50 percent, primarily from increased sales of reciprocating engines for drilling and gas compression and turbines and related services for gas production and transmission. High oil and gas prices were a significant factor behind the increase in sales, Cat said.

Sales of on-highway truck engines were up 5 percent, primarily due to expansion and replacement of truck fleets, Cat said. Sales of electric power engines were up 21 percent, driven by demand for generator sets for communications, data center and standby applications. Marine engine sales were up 33 percent, primarily from increased demand for workboats and petroleum support vessels.

Europe, Africa and Middle Eastern engine sales increased 22 percent, with sales into the electric power sector leading the way with a 35 percent increase, mostly for reciprocating generator sets

In Latin America engines sales were up 21 percent, led by a 49 percent increase in sales of petroleum engines, nearly all from sales of turbines and turbine-related services to support increased investment in oil production.

The smallest sales increase came in Asia/Pacific where sales were up 4 percent, Cat said. The leader here were marine engines, which were up 26 percent, with increased demand for oceangoing and petroleum support vessels due to strong freight and petroleum demand. Interestingly, electric power engine sales declined 19 percent, with most of the decline due, Cat said, to centralized electrical demand management actions and improved electricity reliability in China that drove reduced demand for generator sets.