Resource Industries segment

Caterpillar’s (CAT) Resource Industries segment is the company’s lowest revenue contributor. The segment had a revenue share of 18% in the second quarter. The segment’s revenue share increased by 1.8 percentage points on a YoY (year-over-year) basis. The segment reported revenues of $2.52 billion in the second quarter, which implies an increase of 37.6% on a YoY basis. In the second quarter of 2017, the segment reported revenues of $1.83 billion.

Analyzing Caterpillar’s Resource Industries Segment

The segment’s revenue growth was driven by the demand for equipment across all of the regions. The increase in mining investment triggered the mining activities, which resulted in higher equipment sales. However, Caterpillar thinks that mining customers haven’t fully started their fleet replacements, which indicates that the segment will likely see more demand going forward. The increased mining activity led to higher aftermarket parts sales. Favorable price realization also drove the revenue growth.

On a geographical basis, Asia led the pack with 47% growth. The EMEA (Europe, Middle East, and Africa) region grew 44%, Latin America grew 32%, and North America grew 31%.

Operating profit and margin

The Resource Industries segment reported an operating income of $411 million in the second quarter compared to $99.0 million in the second quarter of 2017—an increase of 315% YoY. The segment reported an operating profit margin of 16.3% in the second quarter—compared to 5.4% in the second quarter of 2017—an increase of 10.9 percentage points YoY. The segment’s operating profit and margin increased due to the higher sales volume and better price realizations.

Investors can hold Caterpillar indirectly by investing in the SPDR SSGA Gender Diversity Index ETF (SHE), which has invested 2.0% of its portfolio in Caterpillar. The fund also provides exposure to Johnson Controls (JCI), Northern Trust (NTRS), and Stanley Black & Decker (SWK) with weights of 0.8%, 0.6%, and 0.5%, respectively, as of July 31.

Latest articles

Apple Arcade (AAPL) is a subscription gaming service that was unveiled at Apple’s annual event last week. The service will launch on September 19.

Cannabis legalization is gaining traction not only in the US but also globally. The third presidential Democratic debate was held on September 12.

Google has agreed to make a one-time settlement of over $945 million euros to the French ministry. The ministry accused Google of evading taxes.

In Q4 2018, legendary investor George Soros sold all his holding in Apple (AAPL). In Q3 2018, Apple represented around 0.2% of his total portfolio.

Jim Chanos, the founder and president of Kynikos Associates, is a long-time short-seller of Tesla stock. Tesla stock has fallen 17.5% in the last year.

Despite Aurora Cannabis's subdued results, Cowen initiated coverage on five cannabis stocks: CRLBF, GTBIF, CURLF, MMNFF, and ACRGF.