Caterpillar Inc. said Friday its second-quarter earnings jumped 38 percent, with sales topping $10 billion. The company also raised its outlook for the full year, saying demand in the nonresidential and highway construction markets remains strong.
Sales of machinery rose 14 percent to $6.88 billion, while engine sales were up 12 percent to $3.08 billion.
Net income at the construction equipment maker increased to $1.05 billion, or $1.52 per share, from $760 million, or $1.08 per share, in the year-ago quarter. That was 10 cents higher than the average estimate of 12 analysts polled by Thomson Financial.
Sales increased by 13 percent to $10.61 billion from $9.36 billion last year, beating Wall Street estimates for revenue of $9.96 billion.
"We had a spectacular second quarter with the strongest financial performance we've reported since the 1960s," said Caterpillar Chairman and Chief Executive Officer Jim Owens. "I am delighted with what has been accomplished, but we still have work to do. From an operational perspective, record demand has resulted in longer delivery times for many of our products than we, or our customers, would like. We're continuing to work with suppliers and within our factories to remove bottlenecks and increase production for a number of our products. The entire Caterpillar supply chain has responded over the past three years to support our unprecedented growth. 6 Sigma has been a significant positive factor for ramping up production, managing our cost structure and delivering record profitability."
Owens noted that the company is entering the fourth year of a recovery that began in mid-2003, and the industries it serves continue to be strong throughout the world, particularly mining, energy and infrastructure development.
"While it's tough to predict the future, historically global industry recoveries have lasted six to eight years, and a variety of factors, particularly past under investment, should help sustain this recovery," Owens said. "We are continuing to invest in growth, and the acquisition of Progress Rail and expanding capacity for large engines are great examples."
Caterpillar said it now expects to earn between $5.25 and $5.50 per share in 2006 on sales growth of 12 percent to 15 percent, which translates into revenue of $38.09 billion to $39.11 billion.
The previous outlook called for earnings between $4.85 and $5.20 per share on a 10 percent sales gain.