PEORIA (AP) -- Heavy machinery manufacturer Caterpillar said Thursday that its second-quarter earnings shot up 91 percent on a big increase in sales of equipment for industries like mining, infrastructure and energy.
The company, considered a bellwether of industrial activity, also raised its 2010 profit outlook Thursday, saying orders are growing and production of its signature black-and-yellow equipment will increase in the second half of the year. Caterpillar CEO Doug Oberhelman noted "significant economic concerns" that remain globally, but remained optimistic.
"We continue to be positive about the longer-term prospects for many of the industries we serve," he said.
Caterpillar Inc. had net income of $707 million, or $1.09 per share. That was up from $371 million, or 60 cents per share of profit a year ago.
Sales rose 31 percent to $10.4 billion, with Caterpillar reporting gains in machinery sales in all four global regions it serves. Dealers built up inventories during the quarter after slashing them a year ago during the recession. Manufacturing costs also fell by $316 million, helping to fatten profits.
Analysts were looking for 85 cents per share of earnings on revenue of $9.8 billion.
For all of 2010, Caterpillar expects to earn between $3.15 to $3.85 per share, up from a previous forecast of $2.50 to $3.25 per share. It also tightened its revenue forecast, bumping up the lower range by $100 million. Caterpillar now expects between $39 billion to $42 billion in revenue.
Analysts foresee $3.29 per share of net income and $38.92 billion of revenue.
When Caterpillar does well, it is often seen as a proxy of broader economic growth. During times of economic expansion, the company sells more of its backhoes, mining equipment and engines. Likewise, when spending contracts during recession, Caterpillar is one of the first to feel the effects. During the recession, it was forced to lay off thousands of workers as sales evaporated.
Early this year, Caterpillar began rebounding strongly as governments poured money into stimulus projects like roadwork and companies cautiously started to spend money again.
The company is seeing a resurgence particularly in areas like Asia due to China's brisk growth and in sectors such as mining because of a rebound in commodity prices.
Asia was again the fastest growing market in the second quarter, with sales improving by 62 percent to $1.7 billion. Caterpillar said overall sales of machinery were helped by factors like low interest rates, higher metal prices that spurred mining activity, and the brighter global economic picture.
The North American market, Caterpillar's biggest, saw sales rise 43 percent. The company said the growth was driven by an improvement in home construction, a modest increase in federal spending for highways, and better prices in sectors like metals, coal and lumber.