Advertisement
News
Advertisement

CAT 2Q Profits Jump 44 Percent

Fri, 07/22/2011 - 5:24am
Josh Funk, AP Business Writer

Caterpillar's second-quarter profit grew 44 percent and with strong demand for its heavy equipment, the company bumped up its outlook for the entire year Friday.

But profits fell just shy of Wall Street estimates and shares tumbled 6 percent in premarket trading.

The Peoria, Illinois, company said it generated $1.02 billion net income, or $1.52 per share. That's up from $707 million, or $1.09 per share, a year ago.

The acquisition of Bucyrus International cut into profit. Without it, profit per share would have been $1.72. Analysts expected $1.74 per share.

Revenue grew 37 percent to $14.2 billion, easily topping Wall Street estimates.

Caterpillar predicts 2011 sales between $56 billion and $58 billion with Bucyrus. Previously, it predicted sales between $52-and-$54 billion.

Caterpillar said, however, that overall sales growth that would have added 50 cents to its per-share earnings this year have been offset negatively by costs associated with the Bucyrus deal.

Caterpillar's earnings are an indicator of the health of the global economy because it is the world's largest maker of construction and mining equipment. When the economy is growing, Caterpillar sells more of its backhoes, mining equipment and engines.

Caterpillar Chairman and CEO Doug Oberhelman said the economic recovery in the United States remains weaker than expected, but the company is still predicting moderate U.S. growth, especially once the nation's leaders agree on trade policy and the debt limit.

Even if the U.S. economy continues to muddle along, Caterpillar expects strong growth to continue in developing countries in Asia, Latin America, the Middle East and Africa. So robust sales of the company's construction and mining equipment is expected to continue.

Oberhelman said he believes the current lack of confidence in the U.S. business climate is the biggest impediment to a stronger recovery.

"Lack of clarity on a U.S. deficit reduction plan, trade policy, regulation, much needed tax reform and the absence of a long-term plan to improve the country's deteriorating infrastructure do not create an environment that provides our customers with the confidence to invest," Oberhelman said. "We're confident that as a country we'll eventually get it right, and we're positioning Caterpillar to be ready when we do."

Company shares fell $6.40 to $105.20 before the market opened in electronic trading.

 

Advertisement

Share This Story

X
You may login with either your assigned username or your e-mail address.
The password field is case sensitive.
Loading