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NEW YORK (AP) â¿¿ Caterpillar Inc. said Thursday that its fourth-quarter profit jumped 60 percent, boosted by pent-up demand for new equipment and continuing growth in developing countries.
The performance of the world's largest maker of construction and mining equipment is an indicator of the strength of the global economy. Along with strong fourth-quarter earnings, Caterpillar issued rosy guidance, saying that it expects the global economy to grow faster this year and construction activity to continue to improve in most parts of the world.
Caterpillar, based in Peoria, Ill., reported net income of $1.55 billion, or $2.32 per share, up from $968 million, or $1.47 per share, in the same quarter last year.
Sales and revenue jumped 35 percent to $17.24 billion, as sales volume increased at all three of the company's major businesses. Revenue from mining equipment company Bucyrus International Inc., which Caterpillar acquired in July, totaled $1.39 billion.
Caterpillar's results easily topped Wall Street predictions for profit of $1.76 per share and $15.95 billion in revenue, according to FactSet. That sent its shares higher and made it one of the biggest gainers in the Dow Jones industrial average on Thursday. The stock rose $2.26, or 2.1 percent, to close at $111.31, after hitting $114 earlier in the day, within a few dollars of its 52-week high of $116.55.
Caterpillar said that despite the ongoing downturn in the construction industry, many of its customers had to replace their aging equipment during the quarter. In addition, the company continued to get a boost from rapid economic growth in developing parts of the world.
Construction sales rose 31 percent to $5.26 billion, while resource industries sales, which include Bucyrus, jumped 80 percent to $5.06 billion. Sales of power systems were up 22 percent to $5.67 billion.
Caterpillar expects the global economy to grow about 3.3 percent this year, with the U.S. economy expanding by at least 3 percent. In addition U.S. construction spending, which has been declining since 2004, should finally begin to recover, the company said.