PEORIA, Ill. ? Caterpillar Inc. said Thursday that its fourth-quarter profit jumped 60 percent, boosted by pent-up demand for new equipment and continuing economic growth in developing countries.
The performance of the world's largest maker of construction and mining equipment is an indicator of the strength of the global economy. Along with strong fourth-quarter earnings, Caterpillar issued rosy guidance, saying that it expects the global economy to grow faster this year and construction activity to continue to improve in most parts of the world.
Caterpillar, based in Peoria, Ill., reported net income of $1.55 billion, or $2.32 per share, up from $968 million, or $1.47 per share, in the same quarter last year.
Sales and revenue jumped 24 percent to $17.24 billion from $12.81 billion, as sales volumes increased at all three of the company's major businesses. Revenue from Bucyrus International Inc., which the Caterpillar acquired in July, totaled $1.39 billion.
Caterpillar said that despite the ongoing downturn in the construction industry, many of its customers who had previously put off purchases were forced to replace their aging equipment during the quarter. In addition, the company continued to get a boost from rapid economic growth in developing parts of the world.
Construction sales rose 31 percent to $5.26 billion, while resource industries sales, which include Bucyrus, jumped 80 percent to $5.06 billion. Sales of power systems were up 22 percent to $5.67 billion.
The results easily topped Wall Street predictions. Analysts polled by FactSet expected profit of $1.76 per share on $15.95 billion in revenue.
Caterpillar expects the global economy to grow about 3.3 percent this year, with the U.S. economy growing by at least 3 percent. In addition, U.S. construction spending, which has been on the decline since 2004, should finally begin to recover, the company said.
The company warned that while Europe's economic crisis probably won't trigger a global recession, economic growth in eurozone counties probably won't improve until the second half of this year.
Caterpillar sees China's economy growing by 8.5 percent in 2012, with more construction and rising demand for commodities bringing more machine sales.
Caterpillar estimates its 2012 profit will be $9.25 per share with $68 billion to $72 billion in revenue. The outlook includes about $6 billion in revenue from Bucyrus and from Motoren-Werke Mannheim Holding GmbH, which Caterpillar also bought last year. Analysts polled by FactSet expect profit of $9.07 per share on $66.99 billion in revenue for Caterpillar this year.
The company said sales of new machines and equipment will continue to improve as customers in developed counties rebuild their fleets. Low interest rates and the expected increase in construction activity are also expected to boost demand.
In addition, Caterpillar expects demand for its mining equipment to continue to be strong globally, as companies keep boosting capacity.
For the full year 2011, Caterpillar earned $4.93 billion, or $7.40 per share, up from $2.7 billion, or $4.15 per share, in 2010. Sales and revenue increased to $60.14 billion from $42.59 billion.
Excluding Bucyrus, Caterpillar earned $7.79 per share and posted $57.61 billion in sales.
Shares rose $3.90, or 3.6 percent, to $112.95 in heavy trading, after hitting $114 earlier in the day. The increase made it one of the biggest gainers on the Dow Jones industrial average and put it within a few dollars of its 52-week high of $116.55.
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