(Reuters) - Caterpillar Inc recorded a fivefold profit surge and raised its 2011 profit forecast as customers bought new heavy equipment to replace old machines that aged during the economic downturn.

The world's biggest maker of earth-moving gear said on Friday that strong demand for equipment used in mining helped revenue rise, while demand for construction equipment has been slow to recover -- a trend that it said allows it plenty of room to grow sales and profit in the coming years.

It raised its full-year profit forecast to a range of $6.25 to $6.75, a range that at its midpoint is 24 cents above Wall Street's prior forecast and suggests growth of about 57 percent from last year.

"If you really look at what's happening in the United States, it's a very slow recovery from very low numbers," said Chief Executive Doug Oberhelman on a conference call with analysts. "When construction activity rebounds in the developed world, call it the United States and Western Europe, we're going to be ready."

The report comes a day after government figures showed that economic growth in the United States slowed sharply in the first quarter, with higher food and gasoline prices starting to weigh on consumer spending and sparking concern about inflation.

Commodity inflation is not necessarily bad news for companies including Caterpillar and General Electric Co that make equipment used in energy production and commodity extraction. Rising demand for and prices of metals, coal and oil are spurring demand for Caterpillar's heavy equipment -- its sales to miners and other resource companies nearly doubled in the quarter, outpacing its construction equipment business.

PROFIT TOPS STREET VIEW

Caterpillar reported first-quarter profit of $1.23 billion, or $1.84 per share, compared with $233 million, or 36 cents per share, a year earlier. Analysts expected profit of $1.31 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 57.2 percent to $12.95 billion, above expectations of $11.69 billion.

"It's a huge number on huge volume, that's the simplest way of describing it," said Longbow Research analyst Eli Lustgarten. He said revenue came in more than $1 billion above forecasts.

Caterpillar joins a string of strong earnings reports from industrials ranging from 3M Co to Komatsu Ltd.

Its shares were up 2.6 percent at $115.58 in midday trading on the New York Stock Exchange; earlier they hit a lifetime high of $116.25. As of Thursday's close, they had risen 63 percent over the past year, more than four times the pace of the rise in the Dow Jones industrial average, of which Caterpillar is a component.

Smaller rival Komatsu earlier this week said operating profit doubled, citing demand in China and a recovery in the United States and Europe.

Caterpillar said the aftermath of the Japan earthquake in March would lower its full-year results, pulling down revenue by about $300 million and operating profit by $100 million.

The company expects to close its $7.6 billion acquisition of mining equipment maker Bucyrus International by the middle of this year.

It said it added 20,813 workers over the past year, about a third of whom work in the United States. That represented a 19.3 percent increase in headcount.

(Reporting by Scott Malone; editing by Robert MacMillan, John Wallace and Dave Zimmerman)

• Add new comment

Your name : *

Your e-mail address :*

Comment: *

Your Message Goes Here

CAPTCHA*

Save Comment