Caterpillar’s 3Q Profit Rises; Stock Plunges After Lowered Outlook

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iesel engine and heavy-equipment manufacturer Caterpillar Inc. reported its third-quarter profit rose but cut its sales forecast for next year, causing the biggest drop in its stock price in 19 years, Bloomberg reported Friday.

The company’s stock price fell $10.02, or 15%, to $59 at the close of trading on the New York Stock Exchange, lowering the Dow Jones Industrial Average, of which it is a component, Bloomberg said.

Its preliminary outlook for 2007 sales and revenues is flat to up 5% from 2006, and profit is expected to be flat to up 10% from the midpoint of the 2006 outlook range, the company said in a statement.

"We're expecting slightly higher sales and revenues in 2007 despite the prospects of a slowing U.S. economy, a sharp drop in sales of on-highway truck engines and weaker housing construction," Chairman and Chief Executive Officer Jim Owens said.

Caterpillar's third-quarter net income rose 21% to $769 million or $1.52 a share, from $667 million or 94 cents a share last year, the company reported.

Sales rose 13% to $10.52 billion from $8.98 billion last year, but Caterpillar lowered its 2006 earnings forecast to between $5.05 and $5.30 a share from an earlier forecast of $5.25 to $5.50 a share.

Third-quarter engine sales increased 23% to $3.37 billion, Caterpillar said. The company makes the advanced combustion emissions reduction technology, or Acert, diesel engine for trucks.

Caterpillar’s third-quarter earnings also include an $80 million charge related primarily to a legal settlement with Navistar Corp., the parent of truck and engine manufacturer In-ternational Truck and Engine. (Click here for previous coverage.)