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Caterpillar 2Q Profit Soars; Raises Outlook

Tue July 27, 2010 - National Edition
Construction Equipment Guide

Caterpillar’s second-quarter earnings shot up 91 percent with the heavy machinery manufacturer reporting robust sales of equipment for industries that range from mining and infrastructure to energy.

The company boosted its 2010 profit outlook as well on July 22, saying it is trying to keep up with new orders and will ramp up production of its signature black-and-yellow equipment in the second half of the year.

The results and Caterpillar’s own forecast reflect an uneven recovery and some anxiety about what kind of rebound to expect. Emerging markets like China and Brazil, not U.S. or Europe, still lead the way.

Asian sales grew by 62 percent to $1.7 billion. Caterpillar said overall sales of machinery were helped by low interest rates and higher metal prices that spurred mining activity, and a brighter global economic picture.

The North American market, Caterpillar’s biggest, saw sales rise 43 percent. The company said the growth was driven by an improvement in home construction, a modest increase in federal spending for highways, and better prices in sectors like metals, coal and lumber.

While sales are up, Caterpillar has not brought back most of the 19,000 full-time and 18,000 contract and part time workers it was forced to shed during the recession. Caterpillar added about 3,650 new workers by the end of the second quarter to push its total employment to about 97,500. A third of those jobs were outside the United States.

Caterpillar CEO Doug Oberhelman noted “significant economic concerns” that remain globally, but he remained optimistic.

“We continue to be positive about the longer-term prospects for many of the industries we serve,” he said.

Caterpillar is a bellwether of industrial activity and broader industrial growth.

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