But Caterpillar warned that even with the slight recovery, construction spending will remain depressed. And while Europe's economic crisis probably won't trigger a global recession, economic growth in eurozone counties is unlikely to improve until the second half of this year.
Edward Rapp, Caterpillar's chief financial officer, said that despite the ongoing financial crisis in Europe, the company still stands to benefit from projects there.
"It just depends on how much longer this chaos in southern Europe goes on," Rapp said in a conference call with analysts. "It's been going on a long time and hasn't tanked the place yet. We don't think it will."
Caterpillar sees China's economy growing by 8.5 percent in 2012, with more construction and rising demand for commodities bringing more machine sales.
Caterpillar estimates its 2012 profit will be $9.25 per share with $68 billion to $72 billion in revenue. The outlook includes about $6 billion in revenue from Bucyrus and from Motoren-Werke Mannheim Holding GmbH, which Caterpillar also bought last year. Analysts polled by FactSet expect profit of $9.07 per share on $66.99 billion in revenue for Caterpillar this year.
The company said sales of new machines and equipment will continue to improve as customers in developed counties rebuild their fleets. Low interest rates and the expected increase in construction activity are also expected to boost demand.
Caterpillar noted that production of some of its products will be limited by its current capacity to make them, though it added that it's making investments to expand capacity.
In addition, the company expects demand for its mining equipment to continue to be strong globally, as companies around the world increase production.
Morgan Stanley analyst Vance Edelson backed his "Overweight" rating for Caterpillar stock. He said that the company is unique, because it's poised to do well if the economy improves but will remain more stable than expected, if things take a turn for the worse.