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Weak sales hit Caterpillar's profit

/ Source: The Associated Press

Caterpillar said Tuesday its third-quarter profit tumbled 53 percent as customers bought fewer of its bulldozers and other yellow-and-black machines.

But the company said the latest quarter was its low point in the recession and raised its profit outlook for 2009. It also expects higher demand next year.

Sales in the third quarter slid 44 percent to $7.30 billion.

The world's largest maker of construction and mining equipment has struggled with lower demand since the world economy worsened late last year. Lower prices for commodities such as iron ore, a key steel ingredient, have undercut orders for its giant mining trucks. A battered housing market also has eaten into the company's sales.

Caterpillar has responded by dramatically cutting production and laying off thousands of workers. Analysts say renewed demand from developing countries such as China and Brazil, a weaker dollar that makes the company's products less expensive in overseas markets and rising commodity prices could brighten Caterpillar's prospects next year.

The company boosted its 2009 profit forecast to a range of $1.10 per share to $1.30 per share compared with an earlier forecast of 40 cent to $1.50 per share. And it expects 2010 sales to rise 10 percent to 25 percent compared with the midpoint of 2009, partly due to dealers using up their stockpiles of Caterpillar products.

Caterpillar said it earned $404 million, or 64 cents per share, during the July-September period. That compares with $868 million, or $1.39 per share, during the same period a year earlier.

Shares of the Peoria, Ill.-based company rose $2.85, or nearly 5 percent, to $60.70 in pre-market trading.