Caterpillar Doubles Profits on Surging Sales
Strong sales growth in developing countries pushed Caterpillar’s third-quarter earnings 96 percent higher, and the world’s largest maker of mining and construction equipment increased its outlook for this year.
Caterpillar said Thursday it earned $792 million net income, or $1.22 per share, in the third quarter. That’s well above the $404 million, or 64 cents per share, the Peoria, Ill., company reported last year.
The company, whose sales are considered a strong indicator of global economic health, says revenue jumped 53 percent to $11.13 billion from last year’s $7.3 billion.
Caterpillar easily beat expectations of $1.09 earnings per share on revenue of $10.48 billion.
Caterpillar’s shares gained 22 cents to $80.10 in early trading Thursday.
Caterpillar now expects to earn between $3.80 and $4 per share in 2010. Previously, it predicted earnings between $3.15 and $3.85 per share.
The maker of yellow-and-black equipment said economic growth in developing regions, such as Asia and South America, played a key role in the improved sales figures, but sales in developed nations, such as the United States, have improved from last year’s low levels.
“While we are expecting positive economic growth in the United States, the recovery is weaker than we’ve seen historically, particularly given the depth of the 2009 recession. To drive economic growth, we encourage government policy makers to advance pro-business initiatives and a growth agenda,” CEO Doug Oberhelman said.
The biggest sales growth in the third quarter came in Latin America, where Caterpillar’s revenue nearly doubled to $1.76 billion. Caterpillar’s revenue grew 55 percent in North America and 51 percent in Asia.
The slowest region for Caterpillar was Europe, Africa and the Middle East, where revenue still grew 31 percent.
Caterpillar said it expects the global economy to grow by more than 3.5 percent in 2011. But the company predicts developing regions will see higher growth rates of nearly 7 percent while the more established economies of the United States, Europe and Japan are likely to record about 2.5 percent growth.
The company said it expects its revenue to approach $50 billion in 2011. That’s higher than the $41 billion to $42 billion Caterpillar expects this year.
Caterpillar said it has hired about 6,200 full-time employees and 9,000 part-time and contract workers as demand increased this year, but Caterpillar is still trying to limit its costs and its employment levels remain below last year.
In 2009, Caterpillar eliminated 19,000 full-time jobs and about 18,000 contract and part-time workers.
Caterpillar is spending money on several projects to increase production capacity, and earlier this year it acquired locomotive maker Electro-Motive Diesel.
JOSH FUNK, AP Business Writer OMAHA, Neb.