Caterpillar reports $233M 1Q profit, boosts outlook for 2010 on improving economy

Caterpillar rebounds from loss; boosts outlook

OMAHA, Neb. — Heavy equipment maker Caterpillar signaled the economy is improving Monday with healthy outlook for the year and a sharp rebound from last year’s first-quarter loss.

Caterpillar said it generated $233 million, or 36 cents per share, in net income. That compares with a loss of $112 million, or 19 cents per share, last year when the recession and ensuing layoffs weighed down results.

If a $90 million health care tax accounting charge is removed from the most current period, the Peoria, Ill., company would have earned a 50-cent per share profit.

Shares jumped nearly 4 percent and hovered above $70 each, the first time that has happened since 2008.

“Economic conditions are definitely improving, particularly in the world’s developing economies,” Chairman and CEO Jim Owens said. “Industry activity and orders are significantly higher than last year and are at record levels in some areas. As a result, we are hard at work ramping up production to meet increasing demand from customers.”

Growth in Asia and Latin America prompted Caterpillar to boost its profit outlook to between $2.50 and $3.25 per share. That’s up from $2.50 per share.

Caterpillar also increased its sales and revenue forecast to between $38 billion and $42 billion; previously, it predicted sales and revenues between $35.6 billion and $40.5 billion.

The company’s yellow-and-black machinery is sold in so many places and used by so many industries, how Caterpillar fares in any given quarter can indicate who healthy the economy is. The company said it is expecting worldwide economic growth of about 3.5 percent this year with the strongest growth in developing countries like China and India.

Without the financial hit related to the new health care law, Caterpillar easily beat the expectations of analysts surveyed by Thomson Reuters, who were looking for earnings per share of 39 cents.

Caterpillar’s revenue fell 11 percent to $8.2 billion, which was short of expectations. But the revenue and profit outlook surprised many and company shares jumped $2.73 to $71.51 in early trading.

The company slashed 19,000 full-time jobs and eliminated about 18,000 contract and part time workers last year as customers stopped buying equipment to ride out the recession with the inventory on hand. Caterpillar said Monday that it has hired about 1,500 people, including 600 in the United States, since the beginning of 2010 because production volume increased.

Caterpillar said it’s main concern related to the economy is that central banks in the United States, Europe and elsewhere might raise interest rates too soon and cause another downturn, but the risk of that is low.

On the Net:

Caterpillar Inc.: www.cat.com