Caterpillar ups profit outlook

Caterpillar on Monday upgraded its full-year profit outlook after earnings in the second quarter nearly doubled, beating market expectations, on the back of a robust global demand for the company’s equipment.

The Deerfield, Illinois-based company reported an adjusted profit of $2.97 a share in the second quarter, compared with $1.49 a share a year ago. Analysts on average had expected earnings of $2.73 a share.

Net profit for the quarter came in at $2.82 per share, compared with $1.35 in 2017.

The company now expects adjusted profit per share to be $11-$12 in 2018, compared with $10.25-$11.25 projected earlier.

Caterpillar’s shares gained 3.4% in premarket trading.

Sales were up 24% from a year ago to $14bn.

In Asia-Pacific, which accounted for nearly a quarter of the company’s revenues, equipment sales surged 39% from a year ago, helped by increased construction activity and infrastructure investment in China. For oil and gas and mining machines, the demand is so strong that the company said it was taking orders for delivery well into 2019.

Yet the shares have been buffeted by rising trade frictions and mounting pressure on costs. The stock has lost about 18% since January and in June fell to its lowest level since late October before recovering modestly.

Caterpillar said US import tariffs could inflate material costs in the second half of the year by up to $200m.