(CAT) - Get Report

posted a jump in first-quarter earnings and revenue Wednesday thanks to higher volume and price increases. The industrial bellwether also spoke effusively about its markets and raised its outlook for the year.

The company said it earned $581 million, or $1.63 a share, for the quarter, up from $420 million, or $1.19 a share, recorded in the same quarter last year. The results beat Wall Street's expectations, with analysts forecasting earnings of $1.36 a share, according to consensus estimates reported by Thomson First Call.

For 2005, Caterpillar now expects revenue to rise 16% to 18% and earnings per share to increase 35% to 40% from 2004.

"As 2005 unfolds, we are encouraged by the fundamental strength of the key markets we serve," the company said. "Mining companies will continue to add capacity to meet anticipated growth in demand for the next several years. In addition, global demand for energy, including coal as well as oil and gas, and large infrastructure projects are growing. Likewise, commercial construction and housing in most countries will create even further demand for our products and services."

During the quarter, Caterpillar's profits benefited from higher sales volume, lending $521 million to its bottom line, and higher price realization, contributing $250 million. Those factors were partially offset by a $489 million increase in core operating costs, and $48 million in higher retirement benefits.

Its sales and revenue rose 29% to $8.34 billion. Higher machinery volume of $1.010 billion, higher engine volume of $425 million, and the favorable impact of currency on sales of $102 million all contributed to the increase.