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Caterpillar & Husqvarna's Profits Rise, Nat'l Mfg. Orders Down

Illinois-based Caterpillar and Stockholm-based Husqvarna both increased sales profits in the first quarter.

Two key equipment manufacturers posted strong quarterly profits this week, despite a nationwide decline in orders for manufactured goods. Caterpillar and Husqvarna's profits grew by 29 and 23 percent respectively, in spite of market trends.

Caterpillar's gross revenue grew 23 percent to $15.98 billion from last year's $12.95 billion, the company announced Wednesday. The Peoria, Ill., firm generated $1.59 billion net income, or $2.37 per share, during the quarter, compared to $1.23 billion net income, or $1.84 per share last year. Despite the good news, stock prices fell 5 percent before the markets closed Wednesday - analysts predicted revenue would be closer to $16.2 billion.

The world's largest construction and mining equipment provider, Caterpillar is increasing investment in manufacturing capacity because of a record backlog of orders. The company acquired mining equipment maker Bucyrus International and engine maker MWM Holding GmbH last year.

''We're seeing strong global demand for most mining products and significant growth in replacement demand for products in the United States,'' Caterpillar Chairman and CEO Doug Oberhelman told AP.

Although Caterpillar has moved to increase output, orders for durable factory goods across the U.S. fell by $8.8 billion in March. The 4.2 percent market drop represents the largest month-to-month decrease in three years, according to a Commerce Department report released Wednesday. New orders have dropped 6.1 percent overall since the beginning of 2012.

While the March market decline was largely because of decreased demand for commercial aircraft, companies also ordered less machinery, a sign that manufacturing output could slow and raising concerns over Caterpillar's high expectations for the rest of the year.

Conversely, Husqvarna AB posted a bigger than expected first-quarter profit rise, overcoming production problems in the United States, where demand spiked amid a warm winter and an improving economy overall.

The world's biggest outdoor power equipment maker said it expected more growth in the United States, where lawn mowers sold particularly well in the quarter. The outlook for Europe was more uncertain, the Stockholm-based company said Thursday.

''In the U.S. market, the near-term outlook is for the stronger demand year-on-year to continue, while the demand outlook for the European market is more difficult to assess,'' Chief Executive Hans Linnarson told Reuters.

American business gained market share in the first quarter on 23 percent sales growth, reaching $12.06 million, matching industry forecasts. Growth for the company's Europe and Asia-Pacific divisions was only two percent.

Husqvarna was plagued by production problems at a new U.S. plant last year, but Linnarson said new products such as robotic mowers and upgraded ride-on mowers were received well in the market.

''The measures we took in the second half (of 2011) have had an effect, and we have managed to meet clients' expectations,'' Linnarson said.

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December 8, 2019, 8:25 am PDT

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