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U.S. sales a drag on Caterpillar 1Q

U.S. sales a drag on Caterpillar 1Q

Caterpillar Inc., the world's largest construction equipment maker, said Friday its first-quarter profit fell 3 percent, as strength in the company's overseas business could not overcome a weak U.S. home building market and a sharp decline in engine sales.
But the company's shares rose nearly 5 percent, or $3.32, to $71.94 in midday trading Friday on the New York Stock Exchange after Caterpillar boosted its earnings forecast for the year.
Matt Collins, an analyst with Edward Jones, said investors are likely banking that Caterpillar will beat its new forecast after international business in the first quarter offset the expected dip in U.S. engine and home-building equipment sales.
"I think investors still view the new forecast as relatively conservative," Collins said.
Net earnings decreased to $816 million (euro599.74 million), from a record $840 million, in the January-to-March period a year ago.
Earnings per share increased to $1.23 per share from $1.20, reflecting buybacks that reduced the averaged diluted share count by 34 million compared with last year. The results for the latest quarter also included a gain of$46 million (euro33.81 million) related to the sale of a security.
Analysts polled by Thomson Financial forecast a profit of $1.09 per share. Thomson estimates usually exclude special items.
"While we expected a sales decline in on-highway truck engines and U.S. housing-related markets, the continued strength in most of the other industries we serve and exceptional growth outside North America helped us deliver good results in a tough quarter," chairman and Chief Executive Jim Owens said in a statement.
Company officials told analysts during a conference call Friday that first-quarter results show Caterpillar has become more of a global competitor whose fortunes do not rest as heavily on sales in North America. The company posted nearly$900 million (euro661.47 million) in overseas equipment sales for industries ranging from mining to construction.
"This was a quarter that really demonstrated that global diversity and product diversity," Mike Dewalt, director of investor relations, told analysts.
Caterpillar said first-quarter revenue grew 7 percent to more than $10 billion (euro7.35 billion) from $9.4 billion a year ago, driven by international business that was much stronger than Wall Street expected. Analysts forecast revenue of $8.94 billion (euro6.57 billion).
The company said its revenue gain came from greater sales volumes outside of the U.S., contributions from Progress Rail, which was acquired in June, and higher prices for products and services.
Sales at its core North America unit, however, fell by $996 million (euro732.03 million). The company cited a plan to reduce inventories at dealerships, a sharp decline in demand for on-highway truck engines and weak construction activity, particularly in the housing market.
Caterpillar has posted record profits for three straight years and predicts another record year in 2007, despite a weak U.S. home building market, that is expected to slow machine sales, and a downturn in engine sales for heavy-duty trucks.
The company boosted its 2007 forecast on Friday, projecting full-year revenue in a range of$42 billion (euro30.87 billion) to $44 billion (euro32.34 billion), up from $41.5 billion (euro30.5 billion) last year. Profit per share is forecast in a range of $5.30 to $5.80, up from $5.17 in 2006.
Caterpillar earlier predicted revenue in a range from $41.5 billion (euro30.5 billion) to $43.6 billion (euro32.04 billion), with profits in a range from $5.20 to $5.70 per share.
Beyond 2007, Caterpillar has projected compound annual growth in profit per share of 15 to 20 percent through 2010, with revenues rising above $50 billion (euro36.75 billion).
"We're working hard to execute our strategy and are well on our way to delivering our financial goals for 2010," Owens said in a statement.
The company designs and manufactures construction and mining equipment, as well as engines for earth-moving and construction equipment. It also is the world's leading manufacturer of electrical generators.
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On The Net:
http://www.caterpillar.com


Updated : 2021-10-26 17:34 GMT+08:00