Caterpillar Q3 earnings power past estimates

Caterpillar (CAT) said Thursday that third-quarter profits increased 8%, soundly beating Wall Street estimates, as the construction equipment giant cut costs amid stagnant revenue.

Net income was $1.02 billion, or $1.63 per share, up from $946 million, or $1.45 per share, in the third-quarter of 2013. Analysts expected per-share earnings of $1.36.

Adjusted for restructuring costs, earnings were $1.72 per share.

Sales ticked up 1% to $13.5 billion.

Caterpillar shares rose 3.6% to $97.80 in pre-market trading after the earnings were released.

"We're pleased that third-quarter profit improvement considering world economic growth remained slower than we'd like," says Caterpillar CEO Doug Oberhelman. "We continue to focus on what we can control — cost management and operational execution."

The company raised its outlook for 2014, saying it now expects earnings of $6 per share, including restructuring costs, up from its previous estimate of $5.75 per share.

Economic growth has slowed in China and other emerging markets that have fueled Caterpillar sales in recent years. But the company said "there is a reasonable likelihood that world economic growth could improve in 2015."

It added that "in developed countries, growth oriented monetary policy should support continued modest economic improvement." But there are significant risks, the company said, including in Africa and the Middle East.

Caterpillar makes construction and mining equipment as well as diesel and natural gas engines and industrial gas turbines.

In the third-quarter, sales of the company's mining equipment fell sharply amid a global glut of oil production capacity. Construction-related sales, which increased in the second quarter partly on the US recovery, dipped in the third quarter as a slump overseas offset growth in North America..