Waves of earnings from Caterpillar as demand recovers

A worker drives a tractor Caterpillar near a construction site in Gilbert, Arizona, October 20, 2009.

Credit: Reuters/Joshua LottBy Scott malone

BOSTON | Friday, April 29, 2011 2: 47 pm EDT

BOSTON (Reuters) - Caterpillar Inc recorded profits increased five times and raised their benefit of 2011 forecast customers purchased new heavy equipment to replace the old machines that year during the economic downturn.

The world's largest manufacturer of Earth gear movement said Friday that strong demand for equipment used instead of income aided mining, while the demand for construction equipment has been slower to recover - a trend that, said allows plenty of room for growth in sales and earnings in the coming years.

It raised its annual profit provides a range of $6.25 to $6.75, a range which at its midpoint is 24 cents above the previous forecast of Wall Street and suggests growth of 57 percent of last year.

"If you really search what is happening in the United States, is a very slow recovery of very low numbers," said Chief Executive Doug Oberhelman on a conference call with analysts. "When the construction activity rebounds in the developed world, call it United States and Western Europe, we are going to be ready".

Still, given that the company beat analysts of first quarter earnings expectations by 53 cents per share, the forecast of the year suggests that the company will not continue its torrid pace for the rest of the year, said analyst Edward Jones Jeff Windau.

"They have had a strong recovery, but now the comparable get a little tougher," said Ventspils. "I hope that growth will moderate the rest of 2011."

GROWING ROLE FOR COMMODITIES

The report comes a day before the Government figures show that economic growth in the United States decreased drastically in the first quarter, with higher food and the prices of gasoline to weigh on consumer spending, causing concern about inflation.

Inflation in commodities is not necessarily bad news for companies such as Caterpillar and General Electric Co, which makes equipment used in the production of energy and the extraction of raw materials. Increasing demand and prices of metals, coal and oil are stimulating demand for heavy equipment of Caterpillar, its sales to the mining and other resource companies almost doubled in the quarter, surpassing its construction equipment business.

"Commodity markets strong for us is a net positive based on the demand that the unity of our mining business," pressure from higher costs of raw materials outside compensation, said the Chief Financial Officer Ed Rapp in an interview.

Exhibition of Caterpillar for commodities including metals and coal will only increase when it closed on its acquisition of $ 7.6 million of equipment manufacturer of mining Bucyrus international in the middle of this year.

The results better than expected to get the company closer to its goal of being able to close this agreement without issuing additional shares, said Rapp. When it was announced the seizure of power for the first time, Caterpillar said might need to issue up to 2 million dollars of shares to cover the purchase.

PROFIT TOPS STREET VIEW

CATERPILLAR reported earnings for the first quarter of 1.23 billion dollars, or $1.84 per share, compared to 233 million dollars, or 36 cents per share, a year earlier. Analysts expected earnings of $1.31 per share, according to Thomson Reuters / B/E/S.

Revenues increased to 57.2% to $ 12,95 million, above the expectations of 11,69 millions of dollars.

Longbow Lustgarten Eli "Is a large number of high-volume, which is the easiest way to describe it," said research analyst. He said that revenues came in more than a billion dollars above forecasts.

CATERPILLAR joins a string of strong industrial earning reports from Co M 3 to Komatsu Ltd.

Its shares rose 2.6% to $115.58 on the stock exchange of New York; before getting to a life of $116.25. As of the close on Thursday, have increased 63 percent last year, more than four times the rate of increase in the Dow Jones industrial average, of which Caterpillar is a component.

CATERPILLAR said that after the earthquake of Japan in March it would reduce its results throughout the year, pull down earnings by around 300 million dollars and 100 million dollars of operating profit.

(Reports by Scott Malone; editing by Robert macmillan, John Wallace and Dave Zimmerman)

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