Equipment manufacturer Caterpillar has announced a record first quarter profit, despite weaker demand from the construction industry in China.
The company announced a 29% rise in first quarter profit, with Caterpillar chairman and CEO Doug Oberhelman citing growth in mining and strong replacement demand for products in the United States after several years of weak sales as factors.
Global construction sales were up 13%, with growth in the Europe, Africa, Middle East region up 11%, a figure that includes the relatively weak growth in Europe.
Oberhelman said the company is expecting construction to increase more than 10% in the Middle East in 2012, and sees similar growth for Africa and CIS countries (ex-Soviet countries).
The company experienced a drop in Chinese sales of between $250-300 million in the first quarter compared with the first quarter of 2011, due to a decline in construction projects following the monetary tightening implemented in 2011 to fight inflation.
However Oberhelman believes that long-term the Chinese construction machinery market will continue to grow, and says Caterpillar intends to continue to increase its Chinese production capacity.
In the meantime, it plans on exporting Chinese-built excavators to other regions where supply is tight, with Oberhelman saying that 20% of China’s 2012 midsize excavator production will be exported.
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