US growth helps Caterpillar beat results forecasts

Resurgent demand for mining and construction equipment in North America has offset sales slumps in China and Latin America to help Caterpillar report better than expected first-quarter results.

Shares in the company jumped as much as 4.5 per cent on Thursday in premarket trading after sales fell less than feared and the company lifted its profit forecast for the year.

Caterpillar sales fell 4 per cent to $12.7bn during the first three months of the year. The market had been bracing for a decline to $12.3bn.

Net profit rose 20 per cent to $1.1bn, or $1.81 a share, as the company continues to aggressively cut costs.

The collapse in global crude oil prices over the past nine months has hit demand for Caterpillar's products.

However, in a sign that the worst is perhaps over, the company said first quarter sales in its energy and transportation unit, which accounts for more than a third of group revenue, have stopped falling and were flat at $4.7bn.

North America was the sole bright spot with sales in all product groups in the region up during the quarter.

By contrast, sales in Latin America, fell 23 per cent as the fallout from the Petrobras corruption scandal paralysed large swath of the Brazilian economy.

In Asia, sales fell 21 per cent amid slowing China growth and the currency headwind from the weaker yen.

Although the company said the outlook for the year remains challenging, it expects earnings per share to be $4.70, or $5 per share excluding restructuring costs this year amid tighter cost control

The previous outlook was for earnings of $4.60 per share, or $4.75 excluding restructuring costs.

After sliding from a peak last year of more than $111, the share price was up about 4 per cent in ahead of the market opening at $84.87

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