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Cat Beats Estimates on Slumping Profit

Caterpillar reported a third-quarter profit that fell on a year-over-year basis but came in well ahead of Wall Street expectations.

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PEORIA, Ill. (


) --


(CAT) - Get Caterpillar Inc. Report

shares were rising modestly Tuesday after the heavy equipment maker reported a third-quarter profit that fell on a year-over-year basis but came in well ahead of Wall Street expectations.

The Dow component also lifted the low end of its outlook for fiscal 2009, saying it's seeing signs of "improving economic conditions throughout most of the world."

For the three months ended Sept. 30, the company earned $404 million, or 64 cents a share, down from a year-ago profit of $868 million, or $1.39 a share. Sales and revenue fell 44% in the latest quarter to $7.3 billion from $12.98 billion in the same period a year earlier.

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Caterpillar said the latest results include pre-tax LIFO inventory decrement benefits of $120 million, or 16 cents a share.

The average estimate of analysts polled by Thomson Reuters was for earnings of 6 cents a share in the September period.

"During the quarter, our primary focus continued to be on trough management and operational execution," said Jim Owens, the company's chairman and CEO. "We lowered production as dealers continued to cut inventories, we reduced costs, maintained positive price realization, lowered inventory, delivered positive operating cash flow and improved our financial position."

For 2009, Caterpillar now sees earnings of $1.10 to $1.30 a share on sales and revenue of $32 billion to $33 billion. Its previous outlook was for earnings of 40 cents to $1.50 a share. Caterpillar said the forecast includes redundancy costs of roughly 75 cents a share.

Excluding the redundancy costs, the company sees earnings of $1.85 to $2.05 a share, compared to its prior view of $1.15 to $2.25 a share.

For 2010, Caterpillar expects sales and revenue to increase between 10% and 25% from the midpoint of its 2009 range. "While 2010 will still be a difficult year, we expect improvement in our top line from the lows of 2009, and it's critical that we manage on the way up as well as we did in the face of declining volume," added Owens. As a result, we've already started planning for an upturn. When it comes, it can come quickly, and we, our dealers and our suppliers will be prepared."

Caterpillar shares were rising 2.5% to $59.28 in recent trading.


Written by Michael Baron in New York