Caterpillar, a bellwether for the construction and housing industry industry as well as the broader economy, reported quarterly earnings that easily beat analyst estimates, and raised guidance for the full year.
The company cited especially strong demand for its construction and mining equipment in the developing world.
Cat CEO Doug Oberhelman said there will be a slowdown in the company's business with China in 2011, but not by much: "We’re forecasting only a 1 percent of slowdown year over year for China, to 9 1/2 percent."
Two-thirds of the company's production is for export, he added.
The Dow component posted a third-quarter profit of $792 million, nearly double from the same period last year, equating to $1.22 a share. Sales and revenue gained 53 percent over the previous year, rising to $11.34 billion.
Caterpillar also slightly raised its full-year outlook range for sales and revenue, from $39 billion to $42 billion to $41 billion to $42 billion. The new profit outlook is $3.80 to $4 a share, considerably higher than the previous range of $3.15 to $3.85 a share.
The company attributed its growth to cost-cutting and increased development in emerging market countries, which suffered in 2009.
"More of the dollars that are hitting the sales number are falling to the bottom line," said Adam Fleck, an analyst at Morningstar. "Operating profits and margins are very, very strong."
It also said that sales in 2011 would be close to $50 billion—essentially back at pre-recession levels.
Caterpillar said that demand in developing countries, including China, India and Indonesia, accounted for about half the growth in machinery sales volume during the quarter, with increased infrastructure construction fueling demand for building equipment and higher commodity prices lifting demand from mining machines.
"Third-quarter results continue to demonstrate our focus on aggressively managing costs and improving cash flow, while continuing to ramp up production to meet customer demand," Caterpillar CEO Doug Oberhelman said in a statement. "Continuing economic growth in the developing world has been key to improving sales."
Sales and revenues grew $3.84 billion from the previous year, held back a bit by a currency impact of $107 million. Profit gained $388 million, which the company attributed to higher sales volume, favorable price realization and improved manufacturing costs.
Caterpillar also provided some good news on the employment front: The company said it increased its workforce by more than 15,000, including 6,000 fulltime hires.
With just a couple of weeks to go before the Nov. 2 mid-term elections in the United States, Caterpillar's earnings release contained an uncharacteristically blunt political plea from the company's management.
Oberhelman, who took the helm at the end of the second quarter, said that while Caterpillar is expecting positive economic growth in the United States, "the recovery is weaker than we've seen historically, particularly given the depth of the 2009 recession."
"To drive economic growth," he said, "we encourage government policy makers to advance pro-business initiatives and a growth agenda. In addition, they should avoid policy decisions that may create trade tensions between the United States and other key trading partners and avoid tax policy that puts U.S. multinationals, like Caterpillar, at a competitive disadvantage."
—Reuters contributed to this report.