Caterpillar boosts outlook, remains cautious on growth
By Ernest Scheyder
(Reuters) - Caterpillar Inc (CAT.N: Quote), the world's largest maker of construction equipment, raised its 2012 profit forecast on Wednesday and said the global economy was slowly improving amid pockets of weakness.
The outlook came after Caterpillar posted a quarterly profit that trounced Wall Street forecasts due to higher sales of bulldozers, marine engines and mining trucks.
Sales rose 31 percent in North America, helped by the 2011 acquisition of Wisconsin-based mining equipment provider Bucyrus. The continent is Caterpillar's strongest growth area, executives said on a conference call with investors.
In Europe, the Middle East and Africa, sales rose 15 percent, although sales of excavators and backhoes were flat.
Business for many customers has not returned to pre-recession levels, but aging equipment is forcing them to invest in new machines, a boon for Caterpillar.
"You just get to a point where (large equipment) gets to the end of usable life, and you get into a replacement cycle," Caterpillar chief financial officer Ed Rapp said in an interview. "Contractors, even if they're doing the same amount of work as before, just have to buy new machines. That's a factor that we're definitely seeing in our numbers."
Sales to energy and rail customers are the strongest product growth areas, with housing showing "some signs of stabilizing," Rapp said.
The company raised its annual earnings forecast by a dime a share but beat second-quarter expectations by 26 cents, making the new 2012 target easier to hit. Still, analysts cautioned that Caterpillar -- like the rest of the world -- is not yet out of the woods. Continued...