Caterpillar CEO Tells Cramer Trade Tensions 'Not New For Us'

Heavy equipment machine maker Caterpillar Inc. CAT's history traces back nearly a full century, meaning it's "navigated trade tensions" before and can do so again with China, CEO Jim Umpleby told CNBC's Jim Cramer.

What Happened

Caterpillar's exposure to China stands at 5% to 10% of total sales and remains "strong" despite Sino-American trade tensions, Umpleby told Cramer in a Thursday interview. 

The company saw a "big increase" in its China business beginning in 2017, and its strengths there are hydraulic excavators and demolition vehicles, he said. 

Dealing with political challenges is "part of what we do" and "not new for us," the CEO said. Caterpillar is very comfortable in its ability to meet expectations, he said. 

"We've seen this before, we've been through it, we'll manage our way through this situation." 

'Not Chasing Growth'

Cramer said he once considered Caterpillar a "boom or bust" company, but under Umpleby's leadership it has become a "profitable growth company" that is "not chasing growth."

This may be most evident in the company's margin improvements over the past few years.

“The Caterpillar team improved operating margin from 11% in 2014 to 16% in 2018 in just 4 years,” Umpleby said.

“Last year we achieved record earnings per share at that $55 billion sales level that was 17% below what we had in 2012 at $66 billion [sales].”

Caterpillar is prioritizing resources toward business lines and regions that generate shareholder value, the CEO said — a strategy the manufacturer believes will generate profit and growth in both the short- and long-term. 

Caterpillar shares were trading down slightly at $133.69. 

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