Construction and mining equipment maker Caterpillar said its quarterly earnings fell 6.4 per cent as weakness in the United States spread into Europe and Asia and offset continued growth in emerging markets.
But the company, which has seen its shares fall more than 50 per cent over the past six months, expressed optimism today that the current crisis in credit markets would not pull the world into a full-blown economic collapse and affirmed its full-year forecast, sending its shares up about 2.6 per cent in premarket trading.
"A few pennies light ... but no disaster," said Eli Lustgarten, an analyst at Longbow Securities.
"They're saying relatively flat revenue next year, which does not necessarily mean up earnings. But we're not talking a catastrophic decline."
Mr Lustgarten said that at $40 a share - close to its current stock price - the market was expecting 2009 earnings of $3 a share, half this year's projected total.
Caterpillar, the world's largest maker of earth-moving equipment, affirmed its full-year profit forecast but painted a bleak picture of much of the developed world. It called conditions in North America "recessionary" and predicted that Europe would be in recession by year end.
Caterpillar acknowledged that a weakening world economy could continue to push commodity prices down and prompt mining and energy companies to reduce investment.
But it expressed optimism that much of the developing world would continue to grow as commodity prices stay above levels that encourage investment and said it does not expect "a worldwide economic collapse as occurred in the early 1980s."
The company, a component of the Dow Jones Industrial Average and a US business bellwether, reported a third-quarter net profit of $868 million, or $1.39 a share, down from $927 million, or $1.40 a share, a year before.
Reuters