CHICAGO (Reuters) - Caterpillar Inc (CAT.N) on Tuesday upgraded the outlook for 2018 profits after the world’s largest heavy-duty equipment maker beat estimates for first-quarter earnings on strong global demand for its equipment.
Shares, part of the Dow Jones Industrial Average .DJI, were up 4.25 percent in pre-market trading.
The Deerfield-?EUR?Illinoisbased company now expects the full-year profit to range between $9.75 to $10.75 per share, $2 above its range in January.
The company, which serves as a bellwether for global economic activity, has been benefiting from a global economy that is having its best run since 2011.
Citi upgraded shares of Caterpillar to ‘buy’ from ‘neutral’ on Monday, saying the industrial giant will benefit from improvements in the Chinese construction sector.
For the first quarter, the company reported a net profit of $2.74 per share, above analysts’ consensus forecast of $2.04 per share. Sales rose 31 percent to $12.9 billion, also above expectations.
Adjusted net profit was $2.82 per share.
Caterpillar said its stronger outlook was primarily driven by better-than-expected sales volume as it saw higher demand across all regions and most end markets.
With the International Monetary Fund predicting robust global growth for the next two years, demand for its equipment is expected to remain strong.
Yet threats of a global trade war pose the biggest risks for a company that sells more than half of its machines outside the United States.
In its annual report earlier this year, the company warned that ‘buy national’ policies or retaliation against such policies could adversely impact its operations.
Its 2018 forecast, however, did not include any potential impact from future geopolitical risks and increased trade restrictions.
Worries about a potential trade dispute have led to a 9-percent drop in the company’s shares since its last earnings report.
Reporting by Rajesh Kumar Singh; Editing by Nick Zieminski
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