US industrial giant Caterpillar reported Thursday sharply improved earnings for the third quarter, citing restructuring and cost controls that helped it weather slower global economic growth.
Caterpillar, maker of a wide range of heavy construction, machinery and mining equipment, raised its 2014 profit outlook and said there was "a reasonable likelihood" that the world economy would improve next year.
The company, considered a bellwether of global economic activity, said net profit rose eight percent from a year ago to $1.02 billion.
"We're pleased with the third-quarter profit improvement considering world economic growth remains slower than we'd like," said Doug Oberhelman, Caterpillar chairman and chief executive, in a statement.
Oberhelman said the company's restructuring, which cost nine cents per share in the third quarter, was beginning to be reflected in the results.
"The diversity of the businesses we're in and the strengthening of our operational performance have been key to helping us improve results and our competitive position in this weak economic recovery," he said.
"Our broad geographic reach and manufacturing footprint help mitigate the impact of currency fluctuations. In fact, currency impacts were positive in the third quarter."
Earnings of $1.63 per share, roughly 12 percent higher than a year ago, blasted past the consensus estimate of $1.36. Excluding restructuring costs, earnings per share were $1.72.
Sales and revenues in the July-September quarter rose 1.0 percent to $13.55 billion, topping expectations of $13.19 billion.
Machinery, energy and transportation sales rose one percent to $12.76 billion, while financial products revenues gained six percent at $791 million.
By geographic region, a 15 percent sales increase in North America was offset by declines in Latin America, down 21 percent, and Asia/Pacific, down seven percent overall, although China sales were roughly flat.
Sales were essentially flat in the region including Europe, Africa, the Middle East and the Commonwealth of Independent States.
Restructuring costs of $81 million in the third quarter were related to a reduction in workforce in the Gosselies, Belgium, facility and several other restructuring programs, the company said.
Caterpillar cut more than 6,000 jobs in the quarter, roughly three quarters of them non-US employees. The company ended the quarter with a total global workforce of 130,967 employees, down from 137,104 a year ago.
During the quarter, Caterpillar repurchased $2.5 billion in common stock, part of the $10 billion stock buyback plan launched this year.
- Boosts 2014 profit outlook -
Caterpillar raised its 2014 earnings outlook to $6.00 per share, up from the prior $5.75 estimate. Excluding a projected $450 million in restructuring costs, earnings would come in at $6.50 per share, an improvement of 30 cents from the previous outlook.
In January the company's first estimate was $5.85 per share excluding restructuring costs.
"The fact that we continue to raise our profit per share outlook on relatively flat sales is a testament to our diverse portfolio of businesses, disciplined cost control and operational execution," Oberhelman said.
Caterpillar said it expected that growth-oriented monetary policies in developed countries would support steady modest economic improvement.
It cited potential for increased infrastructure investment, particularly in the United States, India and Turkey.
But it pointed to significant risks to better global growth, from political conflicts and social unrest in several regions, notably in eastern Europe, Africa and the Middle East.
"The Chinese government's push for structural reform is slowing growth, and the ongoing uncertainty around the direction and timing of US fiscal and monetary policy actions may temper business confidence," the company said.
Caterpillar said its preliminary 2015 outlook for sales and revenues is flat to slightly up from 2014.
Shares in Dow member Caterpillar leaped 5.4 percent to $99.63 in late-morning trade on the New York Stock Exchange.