Caterpillar Earnings Jump

Caterpillar's ( CAT) fourth-quarter profit rose a smaller-than-expected 58% from a year ago and the tractor company trumpeted its first-ever $30 billion-revenue year.

Caterpillar earned $551 million, or $1.55 a share, in the quarter, compared with $349 million, or 97 cents a share, last year. Revenue jumped 34% from last year to $8.57 billion. Analysts had been forecasting earnings of $1.63 a share on revenue of $7.59 billion.

Shares dipped $2.12, or 2.3%, to $89 on Instinet.

The company offered mixed guidance, saying it sees 2005 earnings up about 25% from the $5.75 a share it earned in 2004, or about $7.19 a share. Sales should rise 12% to 15% from the $30.25 billion it put up in 2004. According to Thomson First Call, analysts were forecasting 2005 earnings of $7.25 a share on revenue of $31.15.

"The year will benefit from improved price realization, increased volume, manufacturing efficiencies and an intensified focus on our cost structure," Caterpillar said. "We expect material cost pressures to continue for the first half of 2005, with some relief in the last six months. As a result, we expect the last half of 2005 to be stronger than the first half."

The company was more sanguine about trends that pressured earnings in 2004.

"Sizable increases in energy and metals prices boosted some inflation measures in 2004, but increases in 2005 likely will be much lower," the company said. "In most commodities, prices are already well above the minimums needed to make new investments attractive. Increased production, along with somewhat slower growth in demand, should moderate commodity price pressures."

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