Caterpillar, machinery, Europe, Africa, Asia--Caterpillar's Machinery Sales Up 37% In August Period

CHICAGO (Dow Jones)--Caterpillar Inc.'s (CAT) retail sales continued to expand in the three months ended in August as demand for construction machinery surged in Latin America, according to dealer sales figures released Friday by the company.

Caterpillar, the world's largest manufacturer of construction machinery, said worldwide sales of its equipment rose 37% in the three months to Aug. 31, compared with the same period a year earlier. The August report was the fourth-straight rolling three-month period of sales expansion for the Peoria, Ill., company since mid-2008. For the three months ended in July, machinery sales rose 32%, and increased 22% in June.

The August report continued to show widespread improvement in global construction and mining activity after a severe downturn in 2009.

Caterpillar's Latin American retail sales soared 57% in the August period, following a 32% increase in the July period. South America has been a particularly good market lately for manufacturers of construction and farming machinery because exports of mined minerals, agricultural commodities and burgeoning middle-class consumerism fuel robust gross-domestic-product growth.

Caterpillar revealed earlier this month that it bought a former auto assembly plant in Campo Largo, Brazil, to expand production of its backhoe loaders and small wheel loaders

The backhoe plant will allow Caterpillar to expand production of its larger construction machinery at its flagship factory in Piracicaba. Brazil is seen as a key growth market for construction machinery in the coming years as the country ramps up construction to host the 2016 summer Olympics and the 2014 World Cup soccer tournament.

In North America, Caterpillar's largest geographic market, sales rose 40% in August, after climbing 38% in July and increasing 26% in June.

Caterpillar's sales in Europe, Africa and the Middle East, widely viewed as the company's weakest geographic market, rose 26% in the August report from a year earlier. Sales from the region in July increased 19%.

In the Asia-Pacific region, which has been Caterpillar's fastest-growing geographic market, sales rose 32% in August, following a 41% improvement during the July period.

In the company's engine business, overall sales rose 5% in August after increasing 5% in July. Engine sales to industrial sector rose 43% in August and engine sales for electric power generation increased 10%. But marine sector engine sales plunged 40% in August, following a 34% sales drop in the July period.

The company has attributed the decline to a sharp reduction in worldwide shipbuilding.

Caterpillar's stock was recently up 14 cents at $72.14.

 -By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

Source: The Wall Street Journal