OMAHA, Neb. -- Caterpillar Inc., the world's largest maker of construction and mining equipment, said Monday it is ramping up production as the global economic recovery spurs demand for its heavy equipment, especially in commodity-rich developing countries.
"We're in a revival. There's no doubt about it," Chief Financial Officer Dave Burritt said. "We're heading up, and it's driven by the emerging markets. No doubt."
The Peoria-based company offered an upbeat outlook for its business and the world economy after reporting first-quarter earnings of $233 million on Monday, reversing last year's loss in a quarter weighed down by layoff costs.
Caterpillar's iconic yellow-and-black machinery is sold in so many places and used by so many industries that its results are considered an indicator of the overall health of the economy.
The jump in demand Caterpillar is seeing -- particularly in developing regions like Asia and Latin America and for mining equipment worldwide -- won't necessarily translate quickly into many U.S. jobs because the company has some excess capacity. But the company has hired back about 2,000 people since eliminating 19,000 full-time jobs and about 18,000 contract and part-time workers last year.
Caterpillar's results echo that of other big companies such as Intel Corp. and Whirlpool Corp., which have turned in stronger earnings for the first three months of the year and predicted global growth in 2010.
After the company's earnings report, Caterpillar's shares jumped more than 5 percent to top $70 for the first time since 2008. Then they eased off a bit and closed up $2.87, or 4 percent, at $71.65.
Caterpillar Chairman and CEO Jim Owens said industry activity and orders are significantly higher than last year and are at record levels in some areas. As a result, Caterpillar is ramping up production to meet increasing demand.
Caterpillar's sales fell 11 percent overall to $8.2 billion in the quarter, but in Asia, sales jumped 20 percent.
Caterpillar's manufacturing costs were $566 million lower this year, which helped make the first-quarter profitable even with lower revenue, and company executives say orders in the first quarter were stronger than the revenue total showed.
Higher commodity prices will drive more demand for Caterpillar's mining equipment. Officials said some models of mining equipment are already sold out for 2010, and the company is taking orders for 2011.
"I think that demand conditions are really better than the sales for the quarter would imply. So that makes us bullish," said Mike DeWalt, the company's director of investor relations.
Edward Jones analyst Jeff Windau said Caterpillar is reaping the benefits of the cost cutting it did last year, and the company's results definitely show the economy is improving.
"I think the economy is coming back a little better than some people expected," he said.
Windau said the real test will be whether the spending by Caterpillar's customers is sustainable.
During the first quarter, Caterpillar earned $233 million, or 36 cents per share, compared with a loss of $112 million, or 19 cents per share, a year earlier, when the recession and layoff costs of about $558 million hurt results.
Excluding a health care tax accounting charge of $90 million, Caterpillar would have earned 50 cents per share.
Without the financial hit related to the new health care law, Caterpillar easily beat the expectations of analysts surveyed by Thomson Reuters, who were looking for earnings per share of 39 cents.