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I DA U N I V E R S A L M a rc h -A p r i l 2 0 1 4 51 TRENDS AND TIDBITS continued from page 41 It was a tough 2013, to say the least, for earth-moving- equipment maker Caterpillar, which turned in one of the worst performances of the Dow Jones Industrial Average components. Understandably, investors who tuned in to the company's fourth-quarter and full-year report anxiously awaited any positive news they could get their hands on. Expectations were low, meaning that Caterpillar had a relatively low bar to cross. While there are signs of progress, Caterpillar is still struggling in some of its key segments. Here are a few key items from Caterpillar's latest round of earnings for investors to focus on. Cost cuts drive fourth-quar- ter-profi t growth Caterpillar's fourth- quarter earnings followed a familiar theme this earnings season, which is to produce profi t growth through cost cuts and not sales growth. In all, Caterpillar's sales fell 10% in the fourth quarter and 16% for the full year. e company Why Investors Shouldn't Rejoice Over Caterpillar Inc.'s Earnings attributed its falling sales to reduced sales of its mining equipment. Sluggish global demand for heavy machinery has hit Deere & Company recently, as well. Its own net sales dropped 3% in the fourth quarter. How- ever, Deere navigated last year better than Caterpillar, since its worldwide sales increased 5% for the full year. Caterpillar did manage to produce 48% earnings-per- share growth in the fourth quarter, but that was mostly due to cost cuts and an easy comparison from the prior year's fourth quarter. Cater- pillar's fourth quarter 2012 earnings were negatively aff ected by a $580 million goodwill charge and positively aff ected by a $300 million tax settlement. Stripping out these one- time items to focus on the company's core profi tability paints a slightly diff erent pic- ture than the headline growth fi gure suggests. Caterpillar's adjusted earnings increased just 5% in the fourth quarter. For the full year, earnings per share actually declined by 32%. And yet, shares of Cat- erpillar jumped on the day it released earnings. Caterpillar stock rose nearly 6% imme- diately a er the opening bell. Optimism was likely fueled by the fact that Caterpillar's results were better than the market suspected, and the company was also aided by a 2014 outlook that wasn't as bad as many analysts feared. Future outlook gives inves- tors hope Caterpillar management laid out a forecast for 2014 that looks fairly unimpressive, but the market, neverthe- less, seemed pleased given the stock's performance. Sales are expected to be fl at in 2014 versus 2013, plus or minus 5%. Earnings per share should clock in at $5.85 per share excluding some considerable restructuring costs estimated to shave $0.55 per share off earnings. Even without includ- ing these costs, Caterpillar's guidance calls for just 1.7% earnings growth in 2014. Business Standard reported that India has urged Australia to consider supplying more coking coal to the domestic steel indus- try on a priority basis. Beni Prasad Verma, steel minister of Indi, during a discus- sion with Ian Macfarlane, Minister of Industry and Resources, Australia said, " ere is a huge potential for consumption of cok- ing coal in India. Our country is looking for reliable raw material suppliers. I think Australia can consider supplying coking coal to the Indian steel industry on a priority basis." Verma said that India planned to increase steel production to 300 million tonne from the present level of about 80 million In this regard, it's not clear that investors should be too quick to rejoice. Cost cuts aren't a long-term solution, which explains why Caterpillar is forecasting another diffi cult year ahead. Cutting expenses can only go so far and is a short-term fi x. Investors should be concerned about the company's fairly steep revenue drop in the last year, as it's clear the downturn in global mining activity is taking a toll. Whether that reverses over the next few quarters is far from a guarantee. Precious metals prices remain low, and other equipment makers that focus on the mining industry don't have many good things to say. Mining equipment giant Joy Global, reported its bookings fell 19% in its fourth quarter. Metrics deterio- rated across the board in Joy Global's fourth quarter: sales fell 26%, and adjusted earnings per share collapsed by nearly half versus the same quarter the previous year. ● www.dailyfi nance.com, Bob Ciura, Jan 30, 2014 India Seeks Coking Coal Supply from Australia for Steel Sector tonne. "Our coal requirement is also set to rise in a decade's time, underscoring the need for exploring the possibility of a long- term agreement between Australian miners and Indian steel producers for coking coal." Talking about cooperation between India and Australia in the fi eld of mineral exploration and its trade, Macfarlane said that Australia has been supplying coking coal to India and understands the potential of the Indian steel industry. Verma led a high-level delegation to Australia and New Zealand on a fi ve-day visit for strengthening ties in the areas of mining and coal supply and met Macfarlane. ● www.steelguru.com