updated 1/26/2006 8:48:50 AM ET 2006-01-26T13:48:50

Caterpillar Inc., a leading agricultural and construction equipment maker, surpassed analysts' expectations Thursday with a 54 percent increase in fourth-quarter earnings as higher price realization and sales volume partially offset increased core operating costs.

The Peoria-based company also raised its profit outlook for 2006.

The stock nearly $3.03, or 5 percent, to $65.10 in premarket trading on the INET electronic exchange after having closed Wednesday at $62.07 on the New York Stock Exchange.

Net earnings for the three months ended Dec. 31 rose to $846 million, or $1.20 per share, compared with $551 million, or 77 cents per share, a year earlier. Revenue climbed 13 percent to $9.66 billion from $8.58 billion.

Analysts surveyed by Thomson Financial were looking for a profit of $1.10 per share with $9.14 billion in sales.

Machinery sales increased 22 percent, engines sales increased 17 percent and financial products revenue rose 18 percent from a year ago, the company said.

For the full year, Caterpillar earned $2.85 billion, or $4.04 per share, up 40 percent from $2.04 billion, or $2.88 per share, in fiscal 2004. Sales increased 20 percent to $36.34 billion from $30.31 billion.

Caterpillar boosted its 2006 profit guidance to $4.65 to $5 per share, from $4.52 to $4.91 per share, while its sales outlook remains unchanged at $40 billion. Analysts are targeting earnings of $4.82 per share on sales of $37.9 billion.

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