Caterpillar, the largest mining equipment manufacturer in the world, reported profits that topped Wall Street forecasts for the seventh straight quarter as equipment sales surged 35 percent on strong global demand for construction, mining and energy machines.
Caterpillar serves as a bellwether for global economic activity, is benefiting from a global economy that is having its best run since 2011.
The company reported that its biggest sales increase came from North America, its biggest market, led by better demand for construction and on-shore oil & gas machinery.
“Caterpillar is beginning 2018 with strong sales momentum resulting from strong order rates, lean dealer inventories and an increasing backlog,” chief executive Jim Umpleby said in a statement. “Additionally, there are positive economic indicators across most of the world and in many of the company’s end markets.”
While the construction market has been the strongest, Reuters reported that rising gold, iron ore and copper prices are expected to improve machine utilization and the demand for aftermarket parts. A rebound in oil prices has renewed investments in the sector and boosted demand for equipment.
It also said the prices it charges customers are staying ahead of material costs.
The past year marked a dramatic turnaround for Caterpillar which, weighed down by weak economic conditions and commodity price volatility, saw a more than 40-percent fall in sales between 2012 and 2016.
The downturn forced it to consolidate or close more than 30 facilities and reduced the total workforce by 16,000 between 2015 and 2016. The downsizing has led to some concerns that the company might not have enough muscle to meet the growing demand.
Shares in Caterpillar, part of the Dow Jones industrial average, were last up 0.3 percent. The company’s stock has risen around 80 percent in the past year.
The company forecast adjusted profit of $8.25 to $9.25 per share for 2018, above analysts’ average estimate of $8.19, according to Thomson Reuters I/B/E/S.
In the fourth quarter, in adjusted terms, it made a profit of $2.16 per share. On that basis, analysts had expected $1.79 per share.
Caterpillar took a $2.4-billion charge related to the recent U.S. tax law, widening its net loss before adjustments to $1.30 billion, or $2.18 per share, from $1.17 billion, or $2.00 per share, a year earlier.