Caterpillar's ( CAT) first-quarter earnings tripled, wiping out analysts' estimates, as strong sales of engines and machinery supported a top line that was also gassed by the weak dollar. The company offered a glowing assessment of world economic prospects and sharply raised its full-year guidance.

The company earned $412 million, or $1.16 a share, in the latest quarter compared with earnings of $129 million, or 37 cents a share, last year. Revenue was $6.47 billion in the latest quarter compared with $4.82 billion last year.

The profit increase comprised $405 million of higher sales volume, $74 million in higher realized prices and a $49 million contract penalty in the year-ago period. The gains were partially offset by $77 million in higher operating costs and $55 million of higher retirement benefits.

Analysts surveyed by Thomson First Call were forecasting earnings of 70 cents a share on revenue of $5.17 billion. The company also raised its estimate of full-year revenue growth to 20% from 12% and raised its estimate of full-year EPS growth to 65%-70% from 40%.

"It appears the world economy will have one of the strongest, broadest recoveries in years," Caterpillar said. "Economic stimulus in the United States is producing strong growth, and the Asian economies are improving on last year's outstanding performance. Low interest rates throughout the world and higher commodity prices are encouraging much needed construction spending and investments in the mining industry."

"Sales opportunities are increasing, and we are exceptionally well-positioned to benefit with our broad product offerings and strong global dealer network. We anticipate that keeping pace with volume growth will require additional hiring through the remainder of the year," the company said.

By segment, first-quarter machinery revenue was $4.15 billion, up from $2.94 billion a year ago, while first-quarter engine sales were $1.85 billion compared with $1.49 billion a year ago. For the full year, Caterpillar now sees machine prices rising 2% to 3%.

"We have made tremendous productivity gains in the last few years, and we continue to benefit from a lean and efficient workforce," the company said. "While there were some higher costs related to surging volume, we leveraged 6 Sigma disciplines to help overcome supply chain bottlenecks and meet stronger-than-expected demand. Our record first-quarter results show that people are making a positive difference across the entire value chain."

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