The company also predicted it would post a 2011 profit near $6.00 per share, slightly above the market consensus of $5.86, according to Thomson Reuters I/B/E/S, sending its shares higher in premarket trading.
Caterpillar, the world's largest maker of earth-moving equipment, said higher coal and metals prices lifted machine sales in nearly every part of the globe, including North America, where sales more than doubled.
But the company also benefited from lower taxes, including the renewal of the research and development tax credit. JP Morgan analyst Ann Duignan estimated that more than half of the beat came from the lower-than-expected tax rate Caterpillar paid.
The volumes are terrific, said Eli Lustgarten, an analyst at Longbow Securities. But they got a big tax benefit, too.
Caterpillar reported a fourth-quarter net profit of $968 million, or $1.47 a share, up from $232 million, or 36 cents a share, a year earlier.
Sales at the company, which also makes diesel engines, gas turbines and railroad locomotives, rose 62 percent to $12.8 billion.
Analysts on average had expected the Peoria, Illinois-based company to earn $1.27 a share on sales of $11.63 billion, according to Thomson Reuters I/B/E/S.
Caterpillar said its order backlog stood at $18.7 billion at the end of 2010, nearly double what it was at the end of 2009.
Demand continues to be especially strong for mining equipment, the company said, with customers having to wait between eight and 18 months for delivery.
Caterpillar shares, which closed Wednesday at $95.75 on the New York Stock Exchange, were up 1.7 percent at $97.27 in premarket trading on Thursday.
(Reporting by James B. Kelleher; Editing by Derek Caney and Matthew Lewis)