Caterpillar’s resilient global team delivered excellent results in 2017. As demand improved during the year, they capitalized on the opportunities to serve our customers around the world.
They also introduced new products, further developed our digital capabilities and moved forward with the changes inherent in our new strategy.
In 2017, our sales and revenues increased 18 percent to $45.5 billion. Profit improved from a loss of $0.11 per share in 2016 to a profit of $1.26 per share, and 2017 adjusted profit per share more than doubled to $6.88.
We ended 2017 with a strong balance sheet and more than $8 billion in cash. Our dividend remains a high priority, and we have paid higher dividends for 24 consecutive years. Since 2007, our cash dividend has more than doubled.
One of my first initiatives after becoming CEO in January 2017 was to appoint a diverse, cross-functional team of Caterpillar leaders to develop a strategy for long-term profitable growth. We never lost sight of the fact that our customers have been using our equipment to help improve living standards around the world for more than 90 years.
We wanted a clear statement to capture that historic and enduring purpose and found nine simple words: Our Solutions Help Our Customers Build a Better World. Our customers are at the center of our purpose and helping them to build a better world motivates our employees every day.
Caterpillar’s purpose — the reason we exist — is to provide solutions that help our customers build a better world. We are accomplishing this purpose more effectively than ever with a new enterprise strategy, launched in 2017, that focuses on delivering profitable growth. With our Values as a foundation, we leverage a data-driven approach, known as the Operating & Execution Model, to identify and prioritize business opportunities that offer the greatest potential for value creation. Through a strategic focus on operational excellence, expanded offerings and innovative services, we will gain an understanding of the needs of our customers, allowing us to deliver solutions that will lead our industry and transform the world.
We introduced the new enterprise strategy in September. Our overriding objective is to grow profitably by reinvesting in our strengths, which will deliver value for our shareholders.
At the foundation of the strategy and all we do is our long-standing Code of Conduct, Our Values in Action. These values – Integrity, Excellence, Teamwork, Commitment and Sustainability – define who we are and how we behave with our stakeholders and with one another.
Equally fundamental to our strategy is the Operating & Execution (O&E) Model, a powerful methodology to gain a granular understanding of our financial performance by product, region and application. With the O&E Model, we also evaluate market economics and assess our capabilities to win. Then we work to address areas where we are not producing acceptable returns and to invest in areas with the best opportunity for future profitable growth.
We identified three areas of strategic focus: services, expanded product offerings and operational excellence.
We’ll further develop our services, emphasizing digital technologies and the aftermarket. We’re expanding our product offerings to meet our customers’ diverse needs and help reach new customers as well. We intend to deliver operational excellence by continuing our commitment to world-class safety levels, the highest product quality, Lean manufacturing principles and a competitive, flexible cost structure. We also must attract, retain and develop the most talented team of global employees.
To maintain Caterpillar’s industry leadership, we know our customers need to be more successful working with Caterpillar than they are working with our competitors. Our strategy includes better alignment with our business partners, including the global network of 171 Cat® dealers serving 192 of the world’s countries. When our customers buy our products, they know they will be supported by this most extensive, capable and reliable service network in our industries.
These essential components of our strategy are well underway. Here are some examples from 2017:
In 2018, we expect to make additional investments to expand product offerings and services. We’ll become a more agile company and use the O&E Model to bias resources to areas that represent the greatest opportunity for profitable growth.
The Caterpillar Foundation is making progress toward our goal of alleviating extreme poverty. Since 1952, the Foundation has invested more than $715 million in communities around the world and invested more than $33 million in 2017 alone. By investing in water, shelter, access to food, energy and education, disaster relief and preparedness, and a cleaner environment, the Foundation’s grants empower people to develop resilient and sustainable communities.
The Foundation also invests in and matches contributions to the Red Cross Annual Disaster Giving Program, making funds immediately available for global disaster response. In 2017, this included an additional $300,000 donation for American Red Cross Hurricane Harvey relief in recognition of our employees and facilities affected by that storm.
We also continued to emphasize and invest in sustainability, both in our products and how we manufacture them. We were pleased to be named to the Dow Jones Sustainability World and North America indices, for our 18th year. Extensive information about those efforts can be found in Caterpillar’s 2017 Sustainability Report.
We have many competitive advantages and, with a solid strategy and disciplined execution, there are tremendous opportunities in the years ahead. It’s an honor for me to lead this great company.
Chief Executive Officer