Global sales power heavy gear leader
CHICAGO–Heavy equipment maker Caterpillar Inc. said yesterday that demand for its global mining and energy products pushed first-quarter earnings up 13 per cent, far surpassing Wall Street estimates.
Its stock surged in New York on the news and share prices of two Canadian firms that sell and service Caterpillar equipment also rose on the Toronto Stock Exchange.
Caterpillar’s results did show continued weakening in North America, where the U.S. economy’s gone soft, but better-than-expected strength as sales overseas benefited from the weak American dollar.
Caterpillar said it earned $922 million (U.S.), or $1.45 a share, January through March, compared with $816 million, or $1.23 a share, in the year-ago quarter.
Analysts surveyed by Thomson Financial foresaw profit of $1.33 a share.
Revenue rose 18 per cent to $11.8 billion from $10.02 billion a year earlier – fully $1 billion above analyst estimates. Sales increased 4 per cent in North America but 30 per cent internationally.
Caterpillar said currency impact added $310 million to revenues for the firm based in Peoria, Ill.
CEO Jim Owens noted its financial products business logged its best first quarter for revenues and profit, despite credit market challenges payday advances.
"Even though North America, our largest geographic market, is depressed, we are investing for growth," Owens said.
The U.S. heavy equipment giant’s shares closed on the NYSE up $6.69 to $85.28, as more than 20 million shares traded.
In Canada, shares of Finning International, a major Caterpillar equipment dealer based in Vancouver, finished the day up 81 cents a share at $31.00 (Canadian). Finning has sold lots of the giant CAT trucks to oils-sands operators in northern Alberta as well as South American mining outfits.
Toronto-based dealer Toromont Industries was up $1.05 to $31.91 at the close.
Caterpillar’s writeoffs, as of March 31 were $20 million (U.S.) up from $15 million a year earlier, reflecting the U.S. housing slump.
Caterpillar still expects 2008 earnings per share to rise 5 per cent to 15 per cent over 2007, and sales to improve 5 per cent to 10 per cent.