Caterpillar misses, cuts view, but says mining has bottomed

The news came as the company reported a weaker-than-expected first-quarter profit.

Caterpillar said it earned a profit of $880 million, or $1.31 a share, down from $1.59 billion, or $2.37 a share, in the year-ago quarter.

Analysts had expected the company to report a profit of $1.40 per share. Sales during the period fell 17 percent to $13.20 billion.

Alexander Blanton, a senior analyst at Clear Harbor Asset Management, said Caterpillar's 9-cent EPS miss was "well within the usual plus or minus 10 percent range," typical for the company.

Caterpillar also said on Monday that it would resume a share buyback for the first time in five years.

Larry De Maria, an analyst at William Blair & Co, said Caterpillar's decision to resume the "mothballed" repurchase program was a "positive factor" and probably was contributing to the market's sanguine reaction to the disappointing results and outlook.

Under that plan, which was approved in 2007, Caterpillar could buy back as much as $3.7 billion of its shares before the repurchase authorization expires in December 2015. The company said it would buy $1 billion back in 2013.

CHINA SALES

Oberhelman told analysts during the call that for the first time in three years the company was seeing relative stability around the world.

"We don't want to be overly optimistic but it certainly feels better than the last two springs," he said.

The decline in first-quarter sales was led by a drop in revenue from mining products, which plummeted 23 percent. Sales of construction equipment fell 17 percent and sales of gas and diesel power systems declined 12 percent, the company said.

With mining orders falling, Caterpillar needed a strong rebound from other customers, including residential construction, to offset that weakness.

But that increased demand from builders has not materialized fast enough, in part because some jumped the gun last spring when unseasonably warm weather, combined with signs of the nascent economic recovery in the United States, prompted many construction equipment customers to place orders for new machines.

In the end, the optimism proved to be a little premature, said Eli Lustgarten, an analyst at Longbow Securities.

Clear Harbor Asset Management's Blanton said Oberhelman's optimism about China seemed to be borne out by the company's sales there, which were higher in the first quarter of 2013 than they were in the comparable quarter last year.

Caterpillar shares were up 2.5 percent at $82.42 on Monday afternoon, after dipping 1.2 percent to $79.50 in the morning. The shares have a 52-week high of $108.79 and a low of $78.25.