Caterpillar, sales, construction machinery--Caterpillar Machinery Sales Rise 22% in June Period

CHICAGO -(Dow Jones)- Caterpillar Inc.'s (CAT) retail sales continued to grow in the three-month period ended in June, drawing momentum from rising sales of construction machinery in North America and Europe, according to the company's sales figures released Thursday.

Caterpillar, the world's largest manufacturer of construction machinery, said world-wide sales of its equipment rose 22% during the three-month period ended in June, compared with the same period a year earlier. The June report was the second consecutive rolling three-month period of sales expansion. For the three months ended in May, machinery sales rose 11%, the first year-over-year increase in nearly two years.

The monthly figures are derived from sales reports submitted by Caterpillar dealers. North American retail sales climbed 26% in June, following a 15% increase in the May period. The May period was the first increase in North American equipment sales in nearly four years.

Caterpillar's sales turned positive in Europe, Africa and the Middle East in June after a long decline, rising 8% over the same period a year earlier. Sales in the region fell 8% during the May period and were off 14% in April. Sales in Latin America rose 18% in June, after being down 2% in May.

The latest sales report supports the Peoria, Ill., company's assessment of broad-based improvement in construction-equipment demand, even in markets that had been hard hit by the economic recession, tighter credit conditions and a slowdown in construction activity.

"It really tells the story of our outlook," said Ed Rapp, the company's chief financial officer, in an interview with Dow Jones Newswires. "You're seeing some very smart growth. The Europe, Africa, Middle East and North America numbers are positives."

Caterpillar on Thursday raised its sales and profit guidance for 2010 after reporting a 91% increase in second-quarter income on a 31% increase in revenue.

Asia-Pacific, which has been Caterpillar's fastest growing geographic market, had a 36% increase in June sales. It was the largest gain in any of Caterpillar's geographic markets and follows a 38% sales increase in the region during the May period.

Mine expansions and infrastructure construction, particularly in China and India, have been driving robust sales growth in Asia.

Sales of Caterpillar engines turned positive during the June period, rising 2% from a year ago after being down 10% in May and off 21% in April. Sales of marine engines, however, continue to be a soft spot in the engine business. Marine-sector engine sales fell 29% in June, following a 27% decline in the 27% in May period. The company attributed the weakness in marine engines to an excess of cargo ships.

"The marine business in Europe [was] vastly overbuilt the last few years in terms of new ships," said Caterpillar Chief Executive Doug Oberhelman during a conference call with stock analysts Thursday. "We're going to be seeing that for a while."

Caterpillar's stock was recently up 1.5% at $68.40 a share.

-By Bob Tita, Dow Jones Newswires

Source: Automated Trader