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Caterpillar Inc. (CAT) is a global industrial machines manufacturer based out of Peoria, Illinois. The company is classified under three main segments based on the end user markets that it serves. Caterpillar machinery is used in the construction, mining and power generation industries. Caterpillar’s 2012 market cap was $53 billion, and its global sales were $66 billion. The company’s three main segments - Construction Industries, Resource Industries and Power Systems -accounted for almost a third of the company’s revenues. Geographically, the US accounted for 36% of sales followed by Asia Pacific at 26%. CAT serves its end markets through a network of authorized dealers and distributors.

Caterpillar Inc. Company Description

Caterpillar is the world’s largest manufacturer of heavy-duty construction and mining machinery, diesel and turbine engines, and related technologies. Headquartered in Peoria, Illinois, the company has established a strong international presence and supports an extensive network of dealers and distributors.

Business Model

Caterpillar manufactures machinery used in the construction, mining and power generation industries. The company relies on penetration and investment in developing markets to generate growth, with almost 70% of its revenues currently earned outside the US.

CAT Financial, one of the company’s business segments, provides financing options to dealers and distributors of Caterpillar products. CAT dealers are independently owned, and form an essential link in the supply chain between customers and the company.

Categories of Business Organization

Machinery & Power Systems –Comprises Construction Industries, Resource Industries and Power Systems Industries.

Financial Products -Includes CAT Financial and CAT Insurance.

Business Segments

Caterpillar has three core business segments – Construction Industries, Power Systems Industries and Resource Industries – which together generated over 90% of its total revenues in 2012.

Segment Revenues as a % of Sales

Construction Industries

Construction Industries provides machinery, tools and equipment primarily to companies in the infrastructure and development sector. The segment manufactures various types of loaders, tractors, excavators, and related machinery. The segment reported $19.3 billion in revenues in 2012, having grown at an average annual rate of 3% for the five years till 2012.

Resource Industries

The Resource Industries segment designs, develops, manufactures and provides sales and support services to the mining and forestry industry. The segment’s products include mining trucks, and underground mining and tunnel-boring equipment. It recorded $21.2 billion in revenues for 2012, and recorded a five-year compound annual growth rate (CAGR) of 2.5% over 2008-2012.

Power Systems Industries

The segment supports the utilities and railroad industries, as well as petroleum and marine applications businesses. Revenues in 2012 touched $21.2 billion, having risen at a five-year CAGR of 15.6%. Power Systems, which provides almost a third of Caterpillar’s revenues, has displayed the least volatility in terms of revenues over the last five years compared to Caterpillar’s other segments.

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