2018 marked the 25th consecutive year we paid higher dividends to our shareholders, earning us recognition as a member of the elite Aristocrats Dividend Fund. Our 4th quarter adjusted operating margin was 13.8%. This was lower than our expectations and was impacted primary by write-offs at CAT Financial and higher than expected material and freight costs. However, our full year 2018 adjusted operating margin was 15.9%, 340 basis points higher than 2017, and solidly in line with our investor gain target range. We're continuing to execute our enterprise strategy with the operating and execution model guiding our investments to those areas with the best opportunity for future profitable growth.

I've talked frequently about two proponents of the strategy, expanding offerings and services. Let me walk you through a few successes from last year in both of those areas. In our October call, I talked about our expanded offerings as next-generation articulated trucks and mini-excavators. We've continued to roll out next-gen machines, including the 120-motor grader that offers up to 15% greater fuel efficiency and saves customers up to 15% in maintenance costs with new filtration technology.

In December, we announced the next-generation, 36-ton class excavators. These machines increase operating efficiency, lower fuel and maintenance costs, and improve operator comfort. We also launched our next-generation D-6 dozier, offering customers the world's first high drive, electric drive dozier with 35% better fuel efficiency and increased agility compared to the previous electric-drive models.

We are expanding our engine offerings as well, including the CG series of generator sets, increasing power output, offering higher reliability, and improving return and investment for our customers as they operate on natural gas and biogas, making them more economical. Thanks to the combination of Caterpillar technology in the customers' initiative, the world's first cruise ship, powered by liquified natural gas, set sail in 2018. This is another great example of an expanded offering. We offered our customer an integrated solution utilizing our MAK dual-fuel engines to fully operate this cruise ship using LNG.

Now, a few examples of services, including technology solutions that support our dealers and customers at the initial point of sale and in the after-market. As of November, CAT mining trucks using our Mine Star command for hauling our timeless technology, reached a milestone of moving one billion tons of material. We deployed our first six commercial autonomous trucks in 2013, and the fleet now has grown to more than 150. Six different mining companies are operating command for hauling on sites in Australia, in North and South America.

We are working with customers who operate mixed fleets and have successfully deployed our autonomous technology to retrofit competitor old trucks. We're leveraging our success with autonomy and are collaborating with the customer to pilot remote-control operator stations for landfill operations, which could transform, even revolutionize, many aspects of the landfill industry. We've also introduced an equipment management app that allows our customers to monitor fleet data, request parts and service, and connect with their dealer via mobile devices.

These are a few of the many examples of our global team helping our customers be more successful working with Caterpillar than with any of our competitors.

Now, for the outlook. Following a record year in 2018, we expect further growth and profit per share in 2019 to a range of $11.75 to $12.75. Our outlook assumes a modest sales increase based on the fundamentals of our diverse end markets, as well as macro-economic and geopolitical environments. We will continue to focus on operation excellence, including cost discipline while investing in expanded offerings and services to drive long-term, profitable growth.

In construction industries, we believe the healthy U.S. economy, continued pipeline construction, and state and local funding for infrastructure development will be favorable in 2019. Latin America is expected to continue with recovery, but demand will remain at relatively low levels. In the Europe, Africa, and Middle East region, demand remains steady but political and economic uncertainties exist. In Asia-Pacific, we expect construction growth in countries outside of China. Within China, the industry is very dynamic, and there are a variety of forecasts.

We will continue to monitor the situation, but as of now, we are forecasting the overall China market to be roughly flat in 2019 following two years of significant growth. China represents about 10% to 15% of our total construction industry sales and about 5% to 10% of total Caterpillar sales and revenues.

For resource industries, we believe commodity prices will remain supportive for investment and mining companies will increase their CAP-X budgets in 2019. Demand for heavy construction in quarry and aggregate equipment should also remain strong. In energy and transportation, we expect the recent volatility in oil prices and take-away constraints in the Permian, to make an impact demand for well servicing equipment in the first part of the year.

Gas compression should remain strong. Demand for power generation equipment should continue positive momentum that started in 2018. For industrial engines, the strong U.S. economy remains a positive for demand, but we expect some headwinds in EAME. Finally, in transportation, we expect our rail business to improve in 2019.

In summary, 2018 was an excellent year for Caterpillar and one that demonstrates the power of our strategy. We achieved record profit per share, returned significant capital to shareholders, and continued investment and expanded offerings and services to drive long-term, profitable growth.

Once again, I'd like to thank our global team. Now that 2018 is in the record books, we are focused on delivering another great year. We continue to feel good about our business and increased our profit outlook for 2019. With that, I'll turn it over to Andrew.

Andrew R.J. Bonfield -- Chief Financial Officer

Thank you, Jim, and good morning everyone. This year's record profits and strong cash flows are a fair reflection of the hard work and cost discipline that stems from the company's focus on delivering our strategy using the operating and execution model.

Today, I'm going to walk through the high level about the quarter and full year 2018 results and then I'll discuss our outlook and highlight some of our key financial assumptions for 2019. So, please turn to slide 5 to look at the results for Q4.

[Inaudible] revenues were $14.3 billion, up 11% from last year, but continued growth across all regions and in all three primary segments increased demand for resource industry's machines, higher sales in North America for construction equipment, and higher demand for reciprocating engines to support well servicing and gas compression applications in North America, were all significant drivers of this increase.

4th quarter of profit per share of $1.78 and adjusted profit per share of $2.55 were both up from a year ago. You will recall, in 2017 profit per share was impacted by U.S. tax reform. The 18% increase to adjusted profit per share year over year was largely driven by the higher sales volume along with continued cost discipline.

If you move to slide 6, I'll walk through the 36% increase in operating profit. As you can see from the chart, the operating profit contribution of the higher sales volume was most of the $496 million operating profit increase in the quarter. Price realization was $139 million or about 1% higher than the 4th quarter of last year. Positive price realization was offset by higher manufacturing costs, largely due to higher material and freight costs as steel prices, tariffs, and supply chain inefficiencies continue to impact our results.

Financial products had a $73 million negative impact on our [inaudible] profit for the quarter. I'll walk through this in more detail when I cover that segment.

Lastly, restructuring costs were favorable by $144 million, as restructuring actions continue to ramp down and are expected to return to normalized levels next year, which is why we will no longer exclude them from the adjusted profit per share calculation. In short, or course there are several [inaudible] and takes, price continues to largely offset cost headwinds, [inaudible] costs remain about flat, and higher sales volume remains the primary driver of the improvement in operating profit.

However, we did see a decline in operating margins in the quarter versus year to date run rate. Whilst the decline in the operating margin is typical in the 4th quarter, this year was greater than we expected and resulted from unplanned allowance increases and markdowns in financial products, higher manufacturing costs, including higher material and freight costs, as well as inventory changes. The negative impact from inventory occurred as [inaudible] increased throughout the year and came slightly down in the 4th quarter, resulting in unfavorable operating leverage.

Now this is the performance of each segment in Q4, beginning the construction industries on slide 7. Sales were $5.7 billion, an increase of $410 million or 8%. Construction sales increased in North America and EAME but were down slightly in Asia-Pac and Latin America. The sales increase in North America was $403 million driving nearly all of the construction industry sales growth for the quarter. We believe the North American economy remains robust, much of the increase driven by oil and gas related projects, including pipelines and other non-residential construction activities.

In addition to high energies in demand, fuel inventories also increased in North America. This increase follows several quarters of tight dealer inventory levels and we believe it is now better aligned to meet current demand.

In EAME, sales in the region were up 9% as strong energy's a demand in Europe for infrastructure, road, and non-residential construction, but partially offset by continued weakness in the Middle East.

Asia-Pacific sales were down 4% or $64 million. The sales decline was driven by lower demand in China, partially offset by higher sales in other Asian countries. All sales were down in China in the quarter. This is, in part, due to an unusual seasonal pattern in Q4 2017 with return to a more normal pattern in 2018. I'll remind you how strong the last two years have been. With industry sales intent on bob excavators up about 40% in 2018, up doubling in 2017.

Lastly, several South and Latin American countries continue to experience economic challenges. Sales were down $18 million or about 5% for the region. Turning to profit, CI's [inaudible] profit was about flat versus a year ago with an operating margin of 14.8% down 100 basis points. The favorable impact of higher price realization and improved sales volume were about offset by higher material, labor, and freight costs, as well as that, of course, variable manufacturing cost.

The sequential market decline in operating margins from the 3rd quarter run rate was largely driven by higher material costs and higher variable manufacturing costs. When such an industry's backlog goes out for the quarter and from a year ago as higher production levels, supported an increase in order rates. Most CI equipment remains on managed distribution.

Now let's go to slide 8 and look at resource industries. RI sales were $2.8 billion, up 21% from 4th quarter 2017. Higher sales in the quarter returned by robust demand from heavy construction and quarry and aggregate customers, as well as high shipments, machines to mining customers, as mining companies, increase capital expenditures. Demand for after-market cars to overhaul and maintain equipment remains robust in the quarter.

The decline in resource industries backlog was the result of several factors, including the lumpiness of mining orders and an increase in dealer inventory. Based on activities we are seeing in the market, we expect a slow down on orders to be temporary and are expecting higher mining CAP-X in 2019 to drive higher new equipment sales for the segment.

[Inaudible] profit of $400 million was up an impressive 90% versus the 4th quarter of last year. Statement operating margin improved 14.3%, up 520 basis from 2017. RI's improved performance of margin expansion was primarily due to higher sales. The operating leverage came from several years of significant restructuring actions and the team's continued cost discipline. These gains were partially offset by higher material and freight costs in the quarter.

Now let's turn to slide 9 where we will discuss energy transportation. MT sales in the 4th quarter were $6.3 billion, 11% higher than the same quarter last year. Sales into oil and gas applications were up by $222 million, or 15%. The strength and [inaudible] activity North America for reciprocating gas compression and world servicing applications continued.

Sales for turbines and turbine-related services were about flat. [Inaudible] sales increased by $211 million, or 20%, driven primarily by sales of reciprocating engines to support data center and other large power generation projects. Industrial application sales were about flat with higher sales in North America and Asia-Pacific, about offset by lower sales in Latin America and EAME. Transportation sales were up by 10%, driven primarily by acquisitions of two world services businesses into January 2019.

[Inaudible] profit for energy and transportation was $1.08 billion, up $205 million or 23% from the 4th quarter of last year. The segment margin improved by 130 basis points to 17.2%. MT's profit improvement was mostly due to the higher sales volume partially offset by higher manufacturing costs including trades. MT's backlog was down from the 3rd quarter but up when compared to the 4th quarter of 2017. The growth in backlog year over year is primarily attributed to higher turbine and more [inaudible] engine demand. About half the backlog decline in the quarter was related to large shipments for both free ship engines and turbines. And the other half resulted from the slow-down of orders to support oil and gas applications in light of recent oil price volatility.

Please move to slide 10 and I'll walk through what caused the decline in financial products profitability in the quarter. Financial products 4th quarter profit was $29 million, down $204 million from Q4 2017. More than 85% of the unfavorable change was due to the impacts from equity securities in the insurance services investment portfolio and continue weakness with a small number of accounts in the CAT high-powered finance portfolio.

The federal impact from insurance services was more than half of the change and was due to a $44 million March market loss in the 4th quarter of 20181[inaudible] 3 combined with the absence of a $68 million investment gain from the 4th quarter of 2017. Excluding these [inaudible] impacts that are not indicative of the profit from ongoing business, insurance services would have been profitable with operating margin performance consistent with historical averages.

A favorable change from the CAT powered primary portfolio was due to an increase in the provision for credit losses, primarily from the $72 million unfavorable impact due to an increase in the allowance rate and an increase in write-offs of $13 million.

CAT Financials' [inaudible] portfolio continues to perform well, excluding CAT Powered Finance, CAT financials' key credit quality matrix are in line with historical averages for parts used, write-offs, and the allowance rate. The strategic assessment of CAT Powered Finance was conducted in early 2018, which resulted in changes to the risk management of the portfolio. This includes working down the balance of old loans to reduce exposure and that work has substantially progressed. We have also significantly reduced our risk of exposure going forward and have timed our lending criteria to reduce risk.

Now, let's quickly recap the year on slide 11. As we look back, 2018 was a year of solid strategy execution, production increases across most of our product lines, disciplined cost control, investments and profitable growth initiatives, and record profit per share. For the year, sales and revenue of $54.7 billion, we're up 20% from 2017. Profit per share for the year folio was $10.26 versus $1.26 in 2017. Adjusted profit per share was $11.22, up 63% from 2017's adjusted profit per share of $6.88.

Please turn to slide 12 and I'll walk you through the operating profit for the full year 2018. Operating profit was $8.3 billion, up 86% from $4.5 billion. The most significant driver to operating margins was high sales volume with sales revenues up about $9.2 billion or 20% representing sales growth across all three primary segments and in all geographic regions.

It was another good year for price realization up $601 million, or 1.2%. For the company, price realization more than offset manufacturing cost increases, which were primarily the result of high material and freight costs. Total SGNA and R&D expenses were higher by $249 million, largely driven by increased investments and initiatives to support profitable growth in services and expanded offerings.

Financial products were unfavorable by $141 million, largely due to the absence of gains from the sale of securities and favorable impacts from the new market to market counting equity and securities and weakness in the CAT Power Finance in American portfolios.

Restructuring costs were favorable by $833 million, largely due to the absence of expenses related to a European facility closure in 2017.

On slide 13, you can see the significant improvements in adjustment operating margins across the enterprise and in all three primary segments. These improvements were largely driven by higher sales volumes and continued cost discipline, which enable us to meet or exceed the ranges we committed to at our 2017 Investor Day.

Adjusted operating margin for the enterprise was 15.9%, 340 basis points higher than 2017 with significant improvement in each segment.

Now, let's move on to slide 14 to discuss cash flow. We ended the year with a strong balance sheet and $7.9 billion in enterprise cash. ME&T operating cash flow was $2.5 billion in the quarter and $6.3 billion for the full year, and during the year, the board raised the dividend per share by 10%. In addition, given our financial position and strong cash flow, we bought back $1.8 billion in company stock in the 4th quarter, bringing in our full year stock buy-back to $3.8 billion.

Lastly, we were also able to make a $1 billion discretionary pension contribution in the 3rd quarter. In summary, we returned $5.8 billion in cash to shareholders and entered the year with an enterprise cash balance down just slightly from a year ago. It is this strong cash generation which is the result of the discipline created by the L&E model, is one of the most impressive outcomes of 2018.

I will update you more on the capital allocation [inaudible] during the 2019 Investor Day we will expect to hold in Clayton, North Carolina, on May 2.

Now let's move to slide 15 and I'll walk through our assumptions from the 2019 outlook. Our profit per share outlook range for 2019 is $11.75 to $12.75. This range affects profit per share up between 5% and 14% over the 2018 adjusted profit per share. Across the outlook range, you would expect sales to increase less than 2018. Jim has already taken you through each segment, and segments in market assumptions, which are summarized in slide 4. So, I will highlight just a few key financial assumptions.

Short-term and [inaudible] compensation will be reset to about $800 million. They expect federal price realizations to be marked offset by cost headwinds. Restructuring costs are included in the profit per share outlook as they are expected to return to normalized levels in 2019. Financial profits should revert to historic norms. The outlook assumes that a lot of share count, driven largely by 2019 stock buy-backs, as well as anticipated additional repurchases for 2019. We expect to repurchase around $750 company stock in the first quarter of 2019, with the potential for additional shared new purchases based on quarterly cash generation and alignment with their capital allocation priorities.

We expect a higher tech trade of 26%, up 2% from 2018. The increase in the tax rate is largely driven by the application of U.S. tax reform provisions to the yearly earnings with certain non-U.S. subsidiaries which don't have a calendar fiscal year end. These provisions did not apply to subsidiaries in 2018, and for your cash flow modeling, we expect MET capital expenditures, along with CAT inventory to remain about flat.

Finally, let's turn to slide 16 and recap today's report. 2018 was a great year with record profit per share. Given our solid balance sheet and strong cash flow, we returned $5.8 billion to shareholders while increasing investments to drive profitable growth in services and expanded offerings. Looking ahead to 2019, we're going to continue the execution of our profitable growth strategy, and we are gliding to further growth and profit per share. With that, I'll hand it back to Amy to begin the Q&A portion of the call.

Amy Campbell -- Host

Thanks, Andrew. Now, we will turn it back to Kate to begin the Q&A portion of the call. Please limit your questions to one plus a follow-up.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press *1 on your phone at this time. We ask that, while posing your question, you please pick up your handset if listening on speaker phone to provide optimal sound quality. Please hold for just a moment while we poll for questions. Our first question today is coming from Stephen Volkmann. Please announce your affiliation then pose your question.

Stephen Volkmann -- Jefferies

Hi, good morning. It's Jefferies. I am hoping we can drill down a little bit more on construction industry. That seems to be sort of the biggest point of discussion this morning. Obviously, the margin there was somewhat lower than I think most of us were looking for in pretty minimal incremental margins, so it seems like price and costs were sort of a wash, if I'm understanding your remarks correctly. So, I guess I'm trying to figure out what else was going on there at that with sort of a big headwind for the margin. And then, I'll just throw the follow-up, obviously, right in there, which is how do we think about that in 2019 from an incremental margin perspective? Thank you.

Andrew R.J. Bonfield -- Chief Financial Officer

Thanks, Steve. Obviously, the margins were a little bit lower than we anticipated as well when we talked in the 3rd quarter. There were a couple of factors underpinning that. One, we actually did expect material price actually to exceed manufacturing cost increases in CI. There is a normal seasonal decline in CI margins, but that was one of the things we expected to partially offset that. That didn't materialize, partly because material cost increases and also because of other manufacturing bearings that did occur in the quarter. These included things like the absence of some incentives in Brazil, some variable labor inefficiencies which all accumulated for bad impact. As we look forward to 2019, I'll put out a couple of things about CI margins which give us confidence as we move forward. First of all, we put through the price increase on the first of January. Obviously, that will impact positively our margins and offset some of that weakness we saw in the 4th quarter. And secondly, we do see the recess incentive compensation, which will have a positive impact as we move through the year.

Stephen Volkmann -- Jefferies

Okay. So, incremental margins next year in the sort of more normal 25% range or is that a bridge too far?

Andrew R.J. Bonfield -- Chief Financial Officer

We don't give margin guidance by segment but we would expect next year to see that construction industry's margins will be strong, and given the things like the price increase and the incentive compensation, obviously, that is all tailwinds and should help us improve them.

Steven Volkmann -- Jefferies

Okay. Thank you.

Operator

Thank you. Our next question today is coming from Timothy Saine. Please note your affiliation then pose your question

Timothy Saine -- Citigroup

Yeah, good morning. Yeah, Citigroup. Andrew, maybe this could be a follow-up on the last thread there. Just on pricing for the enterprise as a whole, I think you'd talked last quarter about a 1% to 4% announced increase to dealer. You're given some time has lapsed and maybe some of the end market conditions have changed how you're thinking about an overall yield relative to that 1% to 4% increase for 2019?

Andrew R.J. Bonfield -- Chief Financial Officer

Yeah, I mean there are a couple other factors also which muddy the water term just to remind you obviously the price increase from here, put that through and some of that will also come through into next year as well. Overall, though, we do expect-we take into account, as Jim said, the macro-economic environment and geo-political factors when we set our guidance range. We do anticipate, obviously, that you never get 100% but we do expect a price realization next year and that will offset any manufacturing costs [inaudible] that we expect.

Timothy Saine -- Citigroup

Okay. Let me just take a midpoint. If I threw 2% out, that's $1 billion. Maybe, you think at this point, based on what you've seen in commodity markets and just some of your transportation and logistics experience in recent months, would you expect that level of variable cost inflation or it's just too many moving parts at this point to pin that down?

Andrew R.J. Bonfield -- Chief Financial Officer

I think there are a number of moving parts but my expectation, as I've said, was the price would offset material cost increases.

Timothy Saine -- Citigroup

Okay. Thank you.

Operator

Thank you. Our next question today is coming from Chad Dillard. Please note your affiliation then pose your question

Chad Dillard -- Deutsche Bank -- Director Equity Research

Hi. Good morning. It's Deutsche Bank. So, I just wanted to go back to the tariff discussion. Can you quantify how much impact was with 4th quarter, and how are you thinking about how that's imbedded in that 2019 guide and what should we think about in terms of [inaudible] [00:29:31] for the year?

Andrew R.J. Bonfield -- Chief Financial Officer

Yeah, it's [inaudible] the game. So, if you remember, the circles we talked about, the [inaudible] expecting to be at the bottom end of the $100 million range. We ended up just over $100 million. Our expectation is, at this stage, we don't see a rate change in the tariffs [inaudible], and obviously, then because you just extrapolate that our based on 12 months versus five months for 2018.

Chad Dillard -- Deutsche Bank -- Director Equity Research

Great, that's helpful. Could you provide a little bit more color on the deal [inaudible]? I think it was up about $2.3 billion from 2018. And [inaudible] what you expect that to unwind in 2019 and can you take an entire amount out by the full year end?

Andrew R.J. Bonfield -- Chief Financial Officer

Yes, our assumption is, obviously, as we say [inaudible] has been constrained and, obviously, we've been an immense distribution CI for most of the year. We have seen, as you say, about a $2.3 billion increase. Keep in mind that [inaudible] their expectation. We believe that the growth is directly aligned with current market demand and more normal ranges, but it's all a trend. We expect [inaudible] to be flat. We don't expect any [inaudible] function for guidance, assume that they're will be no further increase in dealer inventory from our shipments in 2019.

Chad Dillard -- Deutsche Bank -- Director Equity Research

All right. Thank you very much.

Operator

Thank you. Our next question today is coming from David Raso. Please announce your affiliation then pose your question.

David Raso -- EverCore ISI

Hi. EverCore ISI. My question related to the, really, to the sales guidance. You're saying up modestly, and I'm just trying to get some sense of, maybe, cadence or where your confidence is from that sales guide. The backlog's currently up only 4.4%, the applied orders are up like 2%, and if you lose the $2.3 billion of inventory benefit to 18, right, you just said inventory's flat, that's over a 4% drag on your sales growth right there by not getting the 2.3% that you got in 18. So, can you help us with your [inaudible] levels where you currently are on your order rates, your backlogs, a lack of inventory growth in 19 that sales should be up modestly, however you want to quantify that.

Jim Umpleby -- Chairman and Chief Executive Officer

Yeah, this is Jim. So, obviously, we are still guided depending on a whole variety of factors. But we are in contact with our dealers, we look at industry trends, we have a bottom process, and based on everything that we see, we believe that, again, sales will be up modestly in 2019. If we just think about or different market segments and can go around the world, we talked about China a lot. And we expect China to be flat [inaudible] construction industry. There's a very good increase. We were up 40% in 2018. Industry demand was up 40% in 2018 after doubling in 2017. Oil and gas compression remain strong, both through our [inaudible] solar business.

We are seeing some weakness in well servicing in [inaudible]. I mentioned earlier we expect that to resolve itself in the last six months of the year after the takeaway issues in the [inaudible] get resolved. We've got positive [inaudible] in power generation. The U.S. economy continues to be strong and that has an impact on both industrial and on our construction business. Transportation, we expect our rail business to be better in 2019 than in 2018. As you know, there's a lot of pipeline construction going on in North America. That's a positive for us. So, again, we just go through it industry by industry, country by country, and the forecast, and we believe it will be up in 2019, modestly.

David Raso -- EverCore ISI

The [inaudible] [00:33:34] question, I think what people are trying to figure out, are we starting the year with any growth rate cushion to be able to absorb the second half of 19 if it is flat and down. We're just trying to get a sense of starting the year versus what sort of bakes into the back half. I mean, we all can speculate but beyond this, I was hoping to have a bit more of a cushion to start the year from the backlog growth and what you just reported. You know, we're just trying to get a sense of the cadence and what kind of [inaudible] orders are needed later in the year.

Andrew R.J. Bonfield -- Chief Financial Officer

David, just to point out a couple of things. I mean, the increase in the backlog at the end of the year was $16.5 billion versus $15.8 billion this year. That is despite putting more inventory into the channels. So, don't forget, these are dealer backlog orders once [inaudible] so dealer have built inventory. And they still expect, even though they built it, they're still asking us for a billion more in orders than we were this time last year. So, that's what gives us that confidence. I think, as Jim said, we also look around in markets, we take all of these things into account. And that does it, give us the confidence to go say we expect sales to be up modestly next year.

Jim Umpleby -- Chairman and Chief Executive Officer

And we do, certainly as you know, we have lumpiness in both our oil and gas business, and in our rail business, and in our mining business, frankly. So, there are variations quarter to quarter if we ship [inaudible] and finance recognizes large orders.

David Raso -- EverCore ISI

I appreciate that. Okay, thank you.

Operator

Thank you. Our next question today is coming from Ross Gilardi. Please announce your affiliation then pose your question.

Ross Gilardi -- Bank of America

Good morning, everybody. Ross Gilardi, Bank of America. Could you help us a little bit on the quarterly earnings cadence for 2019 that you're expecting? I mean, you did 255 in the 4th quarter, you did 282 in the first quarter of 18. I mean, are earnings up in the first quarter of 19, and if they are, can you help bridge with what you did in 2-4 with what you would do in 2-1?

Andrew R.J. Bonfield -- Chief Financial Officer

Yeah, Ross, it's Andrew. Again, the 255 was impacted by the writedowns and [inaudible] which we don't expect in the market losses in [inaudible] finance, which we don't expect to incur. If you added that back, that would be about $2.70. We don't give quarterly guidance on earnings, but if that gives you, then you've got a proper [inaudible] price increases and the start of the selling season which will impact Q1.

Jim Umpleby -- Chairman and Chief Executive Officer

What I read in there was that you recall that we had a very strong Q1 in 2018 so for [inaudible] that'll be there as well.

Ross Gilardi -- Bank of America

Okay, got it. And then can you give me help also either more on the mining [inaudible] side of the business and what you're expecting from a mining truck perspective and assuming in your 2019 outlook, obviously that number's still way, way below what I think you guys would consider normalized demand. But are we at a pause here or does that number continue to grow nicely this year?

Jim Umpleby -- Chairman and Chief Executive Officer

So, certainly machine utilization by our mining customers continue to increase. We anticipate that our CAP-X budgets will increase in 2019. The quotation activity remains robust and we expect our mining business to be higher in 2019 than 18. So, that is a positive for us.

Ross Gilardi -- Bank of America

Thank you.

Operator

Thank you. Our next question today is coming from Jamie Cook. Please announce your affiliation then pose your question.

Jamie Cook

Hi. Good morning. I'm just, you know, given the macro concerns out there, wanted to comment on, specifically, are you taking any action whether it's production or additional cost actions, given the concerns about the macro environment. I'm just trying to understand whether you guys are being proactive here or not. So, first if you could comment on that.

And then, my second question is, I know you said inventories are expected to be sort of flat year on year. Are you doing anything as well with the dealers to make sure we're not over-ordering or, you know, to again prepare for a market that could, potentially, be weaker? Thank you.

Jim Umpleby -- Chairman and Chief Executive Officer

Yeah, Jamie, certainly we've kept a very close control of costs and we still have [inaudible] costs in 4th quarter of 18 less than they were in the 4th quarter of 2017. I do remind you though that we are guiding to a modest sales increase in 2019 so we are not guiding to a sales decrease. Having said that, we'll continue to closely monitor costs and we'll always be ready for whatever the market sends us. You know, one of the things, we believe we're in much better shape. At some point, there will be a market downturn. We're not calling that in 19, but whenever that does occur, we're certainly in a much better position to generate cash than we were in the last downturn. So, again, we'll be very cautious [inaudible] moving forward.

Jamie Cook

And, I'm sorry, just one more follow-up. Just understanding where structuring is now part of gaap, can you just help us understand what that number is, and then also just the finance up contribution 19 versus 18, just given some of the one-offs that we had in 18. Thanks.

Andrew R.J. Bonfield -- Chief Financial Officer

Yeah, so, obviously, we are going through a period where restructuring becomes much more normal. This year, the charge was around $400 million and you should expect it to be substantially lower than that. Otherwise, we would still be adjusting it out of adjusted profit. I'm not going to give you a number because, obviously, it depends on what activities we do will be reported in the Q and it depends what actions we take in the business during the year. But it will be part of normal operation. I mean, and that's the taking into account in our guidance.

The other part of the question...

Jamie Cook

The finance up?

Andrew R.J. Bonfield -- Chief Financial Officer

Yeah, so this year, I think write-offs relating to the CAT Power Finance Portfolio in Latin America have amounted to somewhere around about $150 million in total. That would be the area which we would need to [inaudible] to repair.

Jamie Cook

Okay. I appreciate the color. Thank you.

Operator

Thank you. Our next question today is coming from Joe O'Dea. Please announce your affiliation then pose your question.

Joseph O'Dea -- Vertical Research

Hi. Good morning. It's Vertical Research. I wanted to understand some of the cost that was in the quarter a little bit better so the degree to which you can expand on some of what happened on the materials and freight side that surprised you in the quarter, and then to understand how those work moving forward. Is that something that is corrected as of today and back to the kind of cost structure you expected to end 2018 with or the things that persisted today, and how long will that be the case?

Andrew R.J. Bonfield -- Chief Financial Officer

Yeah, so I mean, obviously, things like manufacturing variances which were attributable to absorption rates and so forth [inaudible] at the end of that period, and they were a portion of that major variance in the quarter, and obviously, they'll be taken into account as you move into 2019 based on production and we'll, obviously, continue to work those through.

With regards to the materials and freight costs, I mean, we did see some material cost increases in the 4th quarter, which were, as we said, we weren't expecting. Part of that is due to the fact that, obviously, we are an environment of constraint [inaudible] still, and that it did seem true in [inaudible]. Those will be built into our numbers for 2019 and into our guidance range. So, basically, will be part of that manufacturing cost being offset by price realization as we look forward. So, those are the two big things regarding that.

Joseph O'Dea -- Vertical Research

And as of October, you were talking, I think, about price offsetting costs. And so, is that meaning that a little bit more assertive on the price front to go after some of these costs, or just trying to understand that dynamic of price/cost neutrality. And I think that was expected three months ago. You've got higher costs today but you still expect to offset the unit price?

Andrew R.J. Bonfield -- Chief Financial Officer

Yeah, I think as you know, irrespective with a little bit stronger performance in the 4th quarter that we actually [inaudible] price to more than [inaudible] to more than I say cost. It didn't happen. And so, that was the challenge that actually happened there. As we look into 2019, as we said, we expect price offset manufacturing cost increases.

Joseph O'Dea -- Vertical Research

Got it. And then, just on the revenue expectations for the year and the modest growth, you walked through some of the key [inaudible] markets and the [inaudible] there. It's unclear, I guess, the degree to which you're looking at a scenario where volumes are up. So, most of the commentary leans a little bit more constructive. There's some clear pockets of headwinds, but overall leans a little bit more constructive and so is that to suggest that the basic expectation here is there got a little bit of volume growth in 2019 on top of the pricing expectations?

Jim Umpleby -- Chairman and Chief Executive Officer

Yes, there is a modest amount of volume increase on top of the price [inaudible].

Joseph O'Dea -- Vertical Research

Great. Thanks very much.

Operator

Thank you. Our next question today is coming from Ann Dightman. Please announce your affiliation then pose your question.

Ann Dightman -- J.P. Morgan

Yes, hi. Good morning. It's J.P. Morgan. I'd like to go back to the [inaudible] and I was hoping you could give us some color on the impact from returns or repossessed equipment in Europe and Latin America, specifically. Should we not be concerned that vehicular values are set too high and that this is just the beginning of negative vehicular value risk or [inaudible] go forward both in Europe and [inaudible].

Andrew R.J. Bonfield -- Chief Financial Officer

Actually, most of that, Ann, it's Andrew. Again, most of that related our sheet to the CAT Power Financial Portfolio, rather than construction equipment. And that was specific license related to the portfolio was talking about where we have had some troubled loans, which we are making substantial progress on actually working through those. We've taken [inaudible] the 2nd quarter and the 4th quarter and the residual risk is being managed and also the portfolio is being managed going forward. This is not a reflection of construction industry residual.

Jim Umpleby -- Chairman and Chief Executive Officer

And I was right [inaudible] associated primarily with the Marine Portfolio from loans that were made quite some time ago.

Ann Dightman -- J.P. Morgan

Okay. Were those a surprise or had you been anticipating those as you went through the year?

Okay. Were those a surprise or had you been anticipating those as you went through the year?

Andrew R.J. Bonfield -- Chief Financial Officer

I mean, it always happens and until you actually take and repossess a piece of equipment back, you don't actually know what the real value is. So, you have an estimate and some of those estimates were proven to be wrong.

Ann Dightman -- J.P. Morgan

Okay. I just, real quick on my follow-up, on the [inaudible] guidance, up modest pricing should be 2.5% which, again, as others have pointed out, because [inaudible], can you talk about what you're seeing broadening Europe? I know Turkey [inaudible] but are you seeing any broader wake-up in Europe across the different regions?

Jim Umpleby -- Chairman and Chief Executive Officer

Yes, Ann, I don't believe we give a 2.5% price guidance for 19 so I think that was...

Ann Dightman -- J.P. Morgan

Well, one to four aggregate is 2.5.

Jim Umpleby -- Chairman and Chief Executive Officer

That's fine. That's fine. So, we talked about, instead of going around the world, you asked about Europe. Then, again, Turkey's been an area of real concern. Just going around the world, Brazil has been tough, Argentina's been tough, South Africa's been tough. But in terms of pointing to a particular country in Europe that has created concern for us, no. Obviously, we're all waiting to see what happens in Brexit and how that'll all shake out, but no. Other than Turkey, that's the biggest concern.

Ann Dightman -- J.P. Morgan

Okay. I'll leave it there. Thank you.

Jim Umpleby -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question today is coming from Meg Dubray. Please announce your affiliation and then pose your question.

Meg Dubray

Yes, good morning [inaudible]. I want to go back to maybe understanding what's going on the cost side a little bit better. If you're saying the volumes here are going to grow modestly next year, how should we think about the manufacturing costs that are currently embedded in your outlook in terms of the headwinds on that? And can you also, maybe, comment at all how you're thinking about R&D, how you're thinking about SGNA. And I know somebody already asked the restructuring question, but what would you consider to be a normal restructuring level in terms of transport for the business home?

Andrew R.J. Bonfield -- Chief Financial Officer

So, starting on, as I think we tried to say, we expect price and manufacturing to offset each other. So, that's our expectation, and obviously, the timing of how those price increases come through and how that feeds through into the business throughout the year will be something we will reporting on. But overall, we expect the two to wash through the year. We will continue to make guarded investments in both R&D and in SGNA to expand our service offering and also other offerings as well. But we will be disciplined about those increases and they will reflect around things which we expect to get a return on as we move forward.

With regards to restructuring, the problem, if I give you a number today in restructuring, I guarantee you that something will happen during the year which will change it. Because as we know, restructuring charges can only be taken once actually an announcement's been made of a restructuring event. But what we expect [inaudible] substantially below the $400 million this year and therefore, that's why we were prepared to absorb over the normal earnings by profit per share for the year.

Meg Dubray

I see. Well, you know, instead of asking a question, maybe I'll just make a comment. I don't know about the other participants on the call, but as far as I'm concerned, I can tell you, I'm having a really hard time equating exactly all that's based in the guidance vis-à-vis where we're all kind of learning in terms of how commodities prices are progressing, fuel prices are progressing. And really, kind of, you're putting your overall outlook together for 2019. So, I'm wondering if there's a way the analysts [inaudible] next call, that we can get a little more granularity at segment level in terms of what you're thinking from revenue and what you're thinking for margins as well. I think I'll give you the call. Thanks.

Operator

Thank you. Our next question today is coming from Jerry Revich. Please announce your affiliation, then pose your question.

Jerry Revich -- Goldman Sachs

Hi. Good morning. It's Goldman Sachs. Listen, I'm wondering if you could expand on your earlier comments in terms of pretty good quotation activity and resource industries. Can you just give us a flavor in terms of commodities that are driving inquiries today, and when do you expect that to translate to seeing order and backlog growth and resource industries? Again, are you hearing from your customers that we're going to need greater clarity on U.S.-China trade relations for them to place the orders or any additional contacts along those points would be helpful, please?

Jim Umpleby -- Chairman and Chief Executive Officer

Yeah, what we've seen is, you know, the idle truck [inaudible] continued to decline throughout 2018. As I mentioned earlier, the utilization of machines continues to increase. We believe that most of the units have now been brought back online [inaudible] situation for a number of years where there was a very large fleet parked and it's no longer the case. Most analysts are forecasting an average of 5% to 6% growth in miner's capital spending in 2019 compared to 2018. Certainly, mining companies are working to get the most out of their assets and they're being cautious as to when they place orders, but quotation activity, as I mentioned, is quite robust. We are selling more product and we expect to have a higher level of business in 19. Certainly, there is some softness in areas like Indonesian coal, but again that's being offset by demand in other regions.

Jerry Revich -- Goldman Sachs

And just to put a finer point on that, are you at a point where you think we're now [inaudible] after hitting a pause and translating to orders in the back half of 18 will see greater pace of new equipment orders in the first half of 19 based on the timing of the tenders that you're looking at?

Jim Umpleby -- Chairman and Chief Executive Officer

Again, mining in particular is quite lumpy and you can get orders, you know, a single order for a very large number of pieces of equipment that has an impact on the backlog. So, again, you know, I hesitate to try to quantify it in terms of a quarterly cadence. But again, year on year in 2019, we expect higher sales in 19 than 18.

Jerry Revich -- Goldman Sachs

Okay. Thank you and Jim, there you mentioned the positive in 19 as locomotives. Can you just frame for us based on the production plan and orders in hand how much of a production ramp are we thinking about 19 versus 18, compared to, you know, the healthy run rate this business was at prior to tier 4.

Jim Umpleby -- Chairman and Chief Executive Officer

Yeah, you know, we're not going to quantify it. But certainly, again, you know that rail traffic has, in fact, increased. In 2018, I think we mentioned in a previous call that we had good growth in rail services with higher traffic. And also, we made a couple of acquisitions as we mentioned earlier this morning. So, we expect continued growth in our service and parts businesses. Again, we stretch our business to increase in 19. I would hesitate to try to cut down to where we were in a previous period, but it is getting better.

Jerry Revich -- Goldman Sachs

Thank you.

Operator

Thank you. Our next question today is coming from Seth Weber. Please announce your affiliation, then pose your question.

Seth Weber -- RBC Equity Analyst

Hey, good morning. It's RBC. I want to just go back to China for a second. You did talk about expectations for Chinese construction market, the industry being kind of flattish. But can you just talk about whether you're seeing anything unusual there from a competitive pricing perspective, and whether that is something that kind of contributed to the lower than expected construction markets in the quarter? Thanks.

Jim Umpleby -- Chairman and Chief Executive Officer

As [inaudible] mentioned, that really did not impact construction margins in the quarter. That's not one of the things that we cited. Certainly, we have competitors all over the world. We have competitors in China, but we are very well-positioned in China. We have invested significantly, we have more than 20 manufacturing facilities, we have roughly 13,000 employees, we have local leadership teams, we've vertically integrated our supply chain in China. So, we are very well-positioned to compete and win in China. We're introducing new products, so we feel good about our competitive situation in China. And again, there's a variety of forecasts that are out there, but after two years of robust growth in CI for us in China, we expect it to be about flat next year.

Andrew R.J. Bonfield -- Chief Financial Officer

Can I [inaudible] a little bit of color on the CAT sales in China actually relating to this, because we did see very strong sales in the 4th quarter of 2017, which then fed through into the first half of this year where, obviously, China as you wouldn't expect in the normal setting season [inaudible] summer, actually were very, very strong. 3rd quarter and 4th quarter had [inaudible] from the first half of the year as you would expect a return to a much more normal pattern. [Inaudible] an overall view of China for the year that impacted the quarter, it actually was just a weakness relating to a very strong comparative in 2017.

Seth Weber -- RBC Equity Analyst

That's helpful. Thank you. And Andrew, maybe just follow up on the, I think you said share buy-back. You're targeting about 750 in the first quarter, which would be down 3 and 0 billion 8 during the 4th quarter and you're sitting on $8 billion in cash. Is there a reason why you're not being more aggressive, I guess, versus the 750 outlook for the 1st quarter?

Andrew R.J. Bonfield -- Chief Financial Officer

Yeah, a couple of things you want to think about, one which is obviously we want to be opportunistic and would depend on market conditions and so forth as to when we're going to the market, and our other uses of cash. The reality is actually in the 1st quarter. We have a lower cash flow, partially because of incentive compensation payments. So, we do take that into account when we're considering the amount for the year. As you will note now, this will be the 4th quarter in a row which we'll have done $750 million. [inaudible] to be in the market on a more consistent basis, rather than be in and out, but we will dare take opportunities to go back and buy more. But that would be traded on actually cash flow and other investment priorities.

Seth Weber -- RBC Equity Analyst

Sure.

Operator

And I think that's going to need to be our last question. Jim, do you have any final comments?

Jim Umpleby -- Chairman and Chief Executive Officer

Well, thank you again. 2018 was a terrific year for CAT in chief record profit per share, strong operating cash flow, returned significant capital to shareholders, and continue to invest for long-term growth. Again, as I mentioned, we believe our enterprise strategy is working. Even though 2018 was a record year, we've increased our profit per share outlook for 2019 and look forward to continuing to serve our customers. Thanks for joining today's call, and look forward to speaking with you next quarter.

Amy Handel -- Host

Thanks, Jim. And Kate, I think that concludes our call.

Operator

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

Duration: 57 minutes

Call participants:

Jim Umpleby -- Chairman and Chief Executive Officer

Andrew R.J. Bonfield -- Chief Financial Officer

Stephen Volkmann -- Jefferies

Timothy Saine -- Citigroup

Chad Dillard -- Deutsche Bank -- Director Equity Research

David Raso -- EverCore ISI

Ross Gilardi -- Bank of America

Jamie Cook

Joseph O'Dea -- Vertical Research

Ann Dightman -- J.P. Morgan

Meg Dubray

Jerry Revich -- Goldman Sachs

Seth Weber -- RBC Equity Analyst

More CAT analysis

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

More From The Motley Fool

• 10 Best Stocks to Buy Today

• 3 Stocks That Are Absurdly Cheap Right Now

• 5 Warren Buffett Principles to Remember in a Volatile Stock Market

• The $16,728 Social Security Bonus You Cannot Afford to Miss

• The Must-Read Trump Quote on Social Security

• 10 Reasons Why I'm Selling All of My Apple Stock

Motley Fool Transcription has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.