Exchange Currency

Caterpillar Sales Jump on Strong International Demand

Caterpillar Inc. ’s CAT -2.94% sales jumped 31% in the first quarter as the heavy machinery giant reported continued strength in construction and mining markets around the world.

The Deerfield, Ill. -based maker of bulldozers, mining trucks and other equipment boosted its profit outlook for the year, saying it could earn as much as $10.75 a share in 2018, $2 more than the upper end of its previous forecast.

Revenue of $12.9 billion in the quarter was lifted in part by a stronger euro and Chinese yuan. Some of the foreign-exchange gains were offset by higher manufacturing costs, primarily due to the price of steel. Manufacturers say steel costs have risen since the Trump administration in March placed duties on imports from many foreign countries.

“The combination of strength in many of our end markets and our team’s continued focus on operational excellence, including strong cost control, helped us deliver improved margins and a record first-quarter profit, ” Chief Executive Jim Umpleby said.

Caterpillar warned, though, that trade disputes could darken the outlook for the rest of the year. Officials in both China and the U. S. are threatening each other with additional trade barriers.

“Any potential impacts from future geopolitical risks and increased trade restrictions have not been included in the outlook, ” the company said.

Caterpillar’s shares rose 4% in pre-market trading. The company’s annual revenue jumped 18% in 2017 following a string of consecutive yearly declines.

Sales growth in North America was Caterpillar’s biggest driver in the quarter. Dealers boosted inventories as demand for construction equipment increased, primarily due to public works and energy infrastructure such as pipelines.

Increased building construction and spending on infrastructure in China drove sales in its Asia/Pacific region. Sales in Latin America rose even though construction activity there remained weak.

Mining companies increasingly replaced equipment and expanded their fleets as commodity prices remained strong.

Overall for the first quarter the company reported a profit of $1.67 billion, or $2.74 a share, up from $192 million, or 32 cents a share a year earlier. On an adjusted basis, earnings more than doubled to $2.82 a share.

Last year’s results were dented by $723 million in restructuring costs primarily related to a facility closure. Restructuring costs in the most recent quarter were $69 million.

Analysts polled by Thomson Reuters had forecast earnings of $2.13 a share on $12.07 billion in sales.

The company’s domestic workforce stood at 51,500 employees at the end of March, up from 46,500 a year ago.

—Imani Moise contributed to this article

Write to Andrew Tangel at Andrew. Tangel@wsj. com


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