Caterpillar tops estimate, sees gains in 2014; stock up
By James B. Kelleher
(Reuters) - Caterpillar Inc posted a stronger-than-expected quarterly profit on Monday as cost cuts and an uptick in demand for its building equipment offset continued weak sales to the mining industry.
The results, together with a better-than-estimated preliminary profit forecast for 2014 and a new $10 billion share repurchase plan, sent Caterpillar's stock up as much as 7 percent in early trading on the New York Stock Exchange.
"We expected there would be a decline in mining sales in 2013, and it turned out to be worse than we anticipated," Doug Oberhelman, the chairman and chief executive officer, said in a statement.
"As a result, we took substantial actions to reduce costs which helped mitigate the impact on profit."
Caterpillar, which cut nearly 10,000 jobs globally last year, said it was beginning to see "some signs of improvement in the world economy, which should be positive for sales" down the road.
It expects construction-equipment sales, which jumped 20 percent in the most recent quarter, to rise another 5 percent in the coming year.
"This is probably the quarter a lot of investors were looking for," said Adam Fleck, an analyst at Morningstar.
Caterpillar's cautious optimism extended to the emerging markets, a source of investors' concern in recent weeks. The company forecast economic growth picking up modestly in the world's developing economies in 2014. Continued...