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Caterpillar’s revenue rebound expected to continue in 2018 and beyond

Prairie+grass+grows+in+front+of+the+Caterpillar+Visitors+Center+on+Jan.+31%2C+2017%2C+in+Peoria%2C+Ill.+The+company+has+announced+it+will+move+its+headquarters+to+the+Chicago+area%2C+though+many+workers+will+remain+in+Peoria.%0A
Prairie grass grows in front of the Caterpillar Visitors Center on Jan. 31, 2017, in Peoria, Ill. The company has announced it will move its headquarters to the Chicago area, though many workers will remain in Peoria.

Prairie grass grows in front of the Caterpillar Visitors Center on Jan. 31, 2017, in Peoria, Ill. The company has announced it will move its headquarters to the Chicago area, though many workers will remain in Peoria.

John J. Kim/Chicago Tribune

John J. Kim/Chicago Tribune

Prairie grass grows in front of the Caterpillar Visitors Center on Jan. 31, 2017, in Peoria, Ill. The company has announced it will move its headquarters to the Chicago area, though many workers will remain in Peoria.

Executives at Caterpillar Inc. have yet to officially forecast sales and revenue for next year, but the upward trajectory that has repeatedly eclipsed expectations this year is projected to continue the steep climb.

A 25 percent increase over this year’s expected final tally of $44 billion is “reasonable” and can be achieved in the “near term,” Caterpillar’s director of investor relations told analysts on Tuesday.

“We didn’t put a timeframe around that,” Amy Campbell said at the Baird 2017 Global Industrial Conference in Chicago. “We do encourage people to be cautious.”

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Caterpillar hasn’t reported sales of $55 billion since the years surrounding its peak in 2012. That year also kicked off the worst downturn in the company’s history — multiple consecutive years of declining revenue that now appears to have bottomed out in 2016 with $38.5 billion in sales.

“A year ago, things were looking pretty dire for 2017, but the picture changed pretty quickly,” Campbell said.

The world’s largest manufacturer of earth-moving equipment has repeatedly revised its estimate for 2018 sales as this year’s quarterly results have exceeded expectations, rising from a flat rate to the current estimate of $44 billion.

The company executed a major restructuring in the years during the downturn, laying off thousands of employees and closing or consolidating 30 facilities around the world.

With demand for construction and mining equipment returning, Caterpillar has started hiring again. Campbell noted that new hires in the second and third quarters this year were all in production positions. If demand continues to grow at the forecast rates, the company will have even more production positions to fill.

“Given the structural cost reduction we’ve taken out of the company, I would think that white collar headcount additions would be fairly limited and most of our headcount growth would come from higher production levels,” Campbell said.

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(c)2017 the Journal Star (Peoria, Ill.)

Visit the Journal Star (Peoria, Ill.) at www.PJStar.com

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