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By John D. Stoll
January 26, 2012 5:00 PM EST
Caterpillar Inc
The strength seen by Caterpillar, a bellwether for global spending and credit conditions, could be seen as a much-needed boost to those concerned about consumer confidence and sovereign debt. The company's forecasts have long been seen as one of the more telling indicators of future growth or malaise.
Caterpillar's results cap a record 2011 in terms of revenue and profits, and it posted its biggest yearly growth rate for sales and income since 1947. The company has been a leading name in a U.S. industrial sector that enjoyed a widespread rebound in 2011.
Acquisitions, increased demand for mining equipment, high commodity prices and sales growth in construction machinery and parts supported Caterpillar during the year. Price increases and higher inventories also fueled the performance.
Investors reacted positively to the report, with shares up 3.2 percent at $112.57, about $4 shy of a 52-week high set in May.
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Peoria, Illinois-based Caterpillar said it would continue to
break records in 2012, with profit expected to rise 25 percent to $9.25 a share and revenue projected to increase between 13 percent and 20 percent. The outlook outpaced analyst expectations and is based on a forecast for higher sales for all geographic regions and business segments except marine engines.
"We're expecting 2012 to be another year of good growth," Caterpillar Chief Executive Doug Oberhelman said in a press release. "We have to be prepared for recovery in the developed world beyond 2012 and continued growth in emerging markets."
RECESSION "UNLIKELY"
The company said the U.S. economy will continue to experience slow growth. Meanwhile, China is moderating, and Latin America growth could slow down.
It estimated that the eurozone debt crisis could lead to negative growth in the region during the first two quarters of 2012 but "it is unlikely to trigger a worldwide recession," and sees improvement there by the second half of the year.
The company said tax expenses are the biggest challenge in 2012 due to its geographic sales mix and regulations.
Caterpillar said construction markets in the United States and Europe remain "depressed," contrasting the strong growth taking place in emerging regions. Still, the company sees buyers in developed markets snapping up new machinery in order to replace outdated equipment.
During a conference call, the company said it expects to "finally" see some growth in U.S. construction spending, but it will remain relatively low.
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