Caterpillar Inc on Thursday reported a better-than-expected quarterly profit despite lower sales and gave a somber outlook for the rest of 2015 based on the strong U.S. dollar, weak oil prices and geopolitical tensions.
But the company maintained its sales outlook for the year and slightly raised its 2015 earnings per share outlook, helping lift shares in the Peoria, Illinois-based company more than 4% after the announcement.
Caterpillar said the strength of the dollar lowered the cost of imported goods in the first quarter, especially from Japan, and could weigh on results through year end. The company also reported a pre-tax gain of $120 million from the sale of a third-party logistics business.
The world's largest construction and mining equipment maker said it expects sales and profit for the remaining three quarters of the year to be lower than the reporting period just ended.
Caterpillar reported first-quarter net income of $1.11 billion or $1.81 per share, up 20% from $922 million or $1.44 per share a year earlier. Excluding restructuring costs, earnings per share totaled $1.86.
Analysts had expected earnings per share for the quarter of $1.35, according to Thomson Reuters I/B/E/S.
The profit beat came despite a 4-percent decline in sales to $12.7 billion from $13.24 billion a year earlier. That also beat analyst estimates of $12.38 billion.
Sales in Caterpillar's energy and transportation business were up slightly, but the company said it did not expect that to continue amid low oil prices.
The company said it expects global gross domestic product growth to hit 2.7% in 2015, slightly higher than the 2.6% growth in 2014.
But it said "significant risks and uncertainties remain that could temper growth in 2015." These include political conflicts and social unrest in the Middle East, Africa and the former Soviet Union. Slower growth in China also poses a risk and the company said "the ongoing uncertainty around the direction and timing of U.S. fiscal and monetary policy actions may temper business confidence."
"We continue to face headwinds and uncertainty in 2015, and our outlook for the year reflects that," chief executive officer Doug Oberhelman said in a statement. "We expect sales and profit in each of the remaining three quarters of 2015 to be lower than the first quarter."
Caterpillar maintained its sales outlook of $50 billion for 2015 and said it expected earnings per share of $4.70, up from its previous forecast of $4.60.
In premarket trading Caterpillar shares were up 4.2% at $88.48.