Cat Purrs on Global Sales

Updated from 9:38 a.m. EDT

Booming economies overseas powered Caterpillar's (CAT) first-quarter earnings past Wall Street's expectations, despite a "recessionary storm" in the U.S.

The Peoria, Ill.-based industrial giant reported a 13% jump in profits for the period before Friday's opening bell, and its shares were recently up 7.1%, to $84.19 midday Friday.

Cat CEO Jim Owens said the company sees "robust demand for products used in the global mining and energy industries and for machines used by our customers to build infrastructure, particularly in emerging markets."

The heavy equipment maker, seen as a bellwether for economic conditions, has long been pessimistic about the U.S. in the near-term, but now its global outlook suggests that fallout from the domestic housing crisis will weigh on the global economy. The company is forecasting worldwide economic growth to average less than 3% in 2008 -- the slowest growth rate since 2003 -- and North American economies are expected to grow just above a 0.5% clip.

Cat said it earned $922 million, or $1.45 a share, in the first quarter, compared with $816 million, or $1.23 a share, in the same quarter last year. Its revenue rose 18% to $11.8 billion.

The results far exceeded expectations on Wall Street, where analysts had expected a profit of $1.33 a share on revenue of $10.77 billion, according to consensus estimates reported by Thomson Financial.

Despite the performance, Cat remains cautious on its full-year outlook.

"We had a great first quarter, no doubt about it, but it's still early in the year and we're still waiting to see how things play out," said Owens on a conference call with analysts. "We're at an unprecedented time in history with North America being so weak and the rest of the world so strong."

Looking ahead, Cat said it still expects 2008 earnings to grow between 5% and 15% on revenue increasing 5% to 10%. However, it lowered its outlook for North American sales, now expecting somewhere between a drop of 2% to a gain of 2%. Previously, North American sales were expected to be flat to up 5%.

"Even though we're currently weathering a recessionary storm in the U.S., we expect the rest of the world to continue to invest in infrastructure growth well into the next decade," said Owens.

Other equipment makers' stock also were rising Friday. Deere Co.(DE) shares were rising 5.7% and Agco(AG) was up 6.5%.

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