by Staff Writers
New York (AFP) April 24, 2014
Industrial giant Caterpillar reported higher earnings and boosted its 2014 profit forecast on Thursday, but warned China's economic transition and the Ukraine crisis could threaten the global economy.
Caterpillar's first-quarter earnings rose 4.8 percent from a year ago to $922 million, thanks to improved performance in the energy, transportation and construction sectors that offset continued weakness in mining.
Caterpillar also raised its 2014 profit forecast by 25 cents per share to $5.55 due to a better outlook for construction that more than offset a negative update to the company's mining-sector outlook.
Caterpillar's chief executive Doug Oberhelman said he was "pleased" with the performance given the tough mining environment and still-cautious global economy.
Caterpillar has trimmed costs over the last year to make up for a sustained drop in investment by global mining giants. Headcount of full-time workers is down nearly seven percent from a year ago.
"We understand we don't control the economy and have instead focused on what we can improve," Oberhelman said.
"We're lowering costs, improving cash flow and driving value for our customers through the continued deployment of our lean manufacturing initiatives."
But Oberhelman also warned of the "continued risk that geopolitical events could negatively impact global GDP growth."
He cited an ambitious effort by China to transition its economy to a more sustainable-growth model, "an enormous task that carries risks for the world economy."
The continued acrimony over Russia's actions in Ukraine was also a threat, he said.
"We are hoping for a peaceful resolution, but business confidence around the world could dampen, and trade and world GDP could slow should the situation deteriorate," Oberhelman said.
"The global economy remains fragile, and as such, one or two setbacks could create substantial downside risk for the global economic recovery."
Caterpillar's results overall translated into $1.44 per share, beating analyst forecasts of $1.24.
Revenues edged higher from $13.21 billion to $13.24 billion, also above the analyst projection for $13.14 billion.
Caterpillar, a member of the Dow Jones Industrial Average, jumped 4.0 percent to $107.50 in pre-market trade.
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