Caterpillar raises full year profit outlook as Asia demand swells

Construction equipment manufacturer Caterpillar raised its profit outlook on Monday after its second quarter earnings almost doubled due to increased global demand.

On sales up 24% to $14bn after double digit growth across all markets, the Illinois-based company generated a record second-quarter adjusted profit of $2.97 per share, compared to $1.49 in the same period last year. Net profit for the quarter came in at $2.82 per share, compared with $1.35 last year.

Chief executive Jim Umpleby said the results in the first half of the year and continued strength in many end markets led him to raise the profit outlook for 2018 to between $11 and $12 per share, an increase of 75 cents over previous figures.

The S&P 500 company saw almost a quarter of its profits stem from the Asia-Pacific region where equipment sales have surged 39% from the same point last year.

Elsewhere, demand for mining and oil and gas equipment is so strong that Caterpillar has deliveries pre-booked for well into 2019.

A statement from Caterpillar said the company intends to offset the impact of tariffs by increasing prices later this year, as global trade friction has knocked 18% of company share prices since January.

David Madden, market analyst at CMC Markets, said: "The heavy machinery manufacturer has enjoyed a pickup in business in the past two years, with a turnaround in the natural resources sector. The robust housing sector in the US has also been beneficial to Caterpillar."

Caterpillar’s shares were down 0.01% at $142.56 at 1451 BST.