Caterpillar Inc.’s second-quarter profit soared 67 percent because of growing demand for its construction and mining equipment, and the company boosted its outlook for the year.
Caterpillar is the world’s largest maker of construction and mining equipment, and its results are watched closely because they are considered an indicator of industrial activity and the health of the overall economy. CEO Doug Oberhelman said Caterpillar is prepared to cut costs if the economy does weaken significantly, but he remains cautiously optimistic, despite widespread fears of a slowing global economy.
“The good news is, this doesn’t feel like 2008. Interest rates are low, central banks are prepared to inject more liquidity if needed, and housing is coming off lows, not a peak, and seems to be improving,” Oberhelman said.
The Peoria, Ill., company said July 25 that it generated $1.7 billion in net income, or $2.54 per share, from April through June. That’s up from $1.02 billion, or $1.52 per share, a year ago. Revenue increased 22 percent to $17.37 billion from last year’s $14.23 billion.
Analysts surveyed by FactSet expected Caterpillar to report earnings per share of $2.28 on $17 billion in revenue.
Caterpillar now expects earnings per share of $9.60 in 2012. That’s up from a prediction in April of $9.50 and tops analysts’ expectation of $9.54.
But the company tightened its revenue forecast for the year to between $68 billion and $70 billion from a previous prediction of between $68 billion and $72 billion. Analysts expect $69.44 billion.
Shares rose $2.24, or 2.8 percent, to $83.67 in morning trading July 25.
Caterpillar’s higher quarterly sales volume and prices provided a $2 billion boost, with sales rising in every region worldwide. Last year’s acquisitions of mining equipment maker Bucyrus International and engine maker MWM Holding GmbH also provided a $1.37 billion boost to sales during the quarter.
The biggest sales improvement came in North America, where sales grew 31 percent as construction firms upgraded their aging fleets even though construction activity remained slow. Sales in Asia grew 25 percent because increases in Australia and other countries offset a decline in China.