By Bob Tita
Strong demand for Caterpillar Inc.'s (CAT) construction and mining equipment in North American continues to offset weakening sales elsewhere in the world, as the company reported Wednesday that global sales rose 11% in the three months to the end of May.
It was the 24th straight three-month period of retail sales growth for the world's largest seller of bulldozers, excavators and wheel loaders. But growth has been decelerating lately in most of Caterpillar's geographic markets, as tougher year-earlier comparisons and deteriorating economic conditions, particularly in Europe, hold down sales increases.
World-wide dealer-reported machinery sales climbed 12% and 18% from a year earlier for the three months ended in April and March, respectively.
North America, which is the company's largest geographic market, continued to be a pillar of strength for the Peoria, Ill., company. Even against tough year-ago comparisons, sales in North America rose 31% in the three months to May 31, following a 32% increase in April and a 36% increase in March.
Caterpillar has attributed North America's sales performance to the replacement of worn-out machinery whose life cycle was extended because of the 2008 economic recession. Caterpillar dealers also have expanded their inventories of machinery and increased or replaced their rental fleets.
Sales in Latin America continued to fall in the face of tough economic conditions, particularly in Brazil. Caterpillar's May sales from the region slipped 6% from a year earlier, following a 13% decline during April and a 6% decrease in March.
Sales growth in Europe, Africa and the Middle East weakened, increasing 4% during May, after April sales rose 14% and March sales increased 21%.
China's dismal construction machinery market and softening demand for mined commodities weighed on sales in the Asian-Pacific region, where sales increased 5% during the May period. Asia sales also increased 5% during the April period and climbed 15% in March.
Caterpillar's engine business remained volatile, with overall sales increasing 2% in the May period, after rising 5% in April and declining 1% in March. Sales of engines for generating electric power continued to fall, dropping 19% during the May period, following a 15% decline in April and a 19% decline in March.
Increasing sales of engines to the petroleum industry largely offset declines in other engine markets, rising 25% during May, following a 26% increase in April and a 12% increase in March.
Transportation industry sales, which includes engines for ships and railroad locomotives, rose 9% during the May period, following a 14% increase during the April period and an 11% increase in March.
Caterpillar's stock closed down 1.9% at $87.17 a share Wednesday.
Write to Bob Tita at email@example.com