January 26, 2006 9:00 AM, EST

Caterpillar's Fourth-Quarter Income, Sales Surge

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ngine and heavy-equipment manufacturer Caterpillar Inc. said Thursday its fourth-quarter profit surged 54% to $846 million or $1.20 a share, from $551 million or 77 cents a year earlier.

Sales increased 13% to $9.7 billion, the company said in a statement.

Caterpillar also raised its earnings forecast for 2006 to a range of $4.65 to $5 a share, from its October forecast of $4.52 to $4.91.

Sales will rise to about $40 billion this year from $36.3 billion last year, the company projected.

The company has raised its prices as much as 13% in the past two years as plants ran at full capacity to meet demand, particularly for mining equipment, Bloomberg reported.

Engine sales gained 10% to $3.2 billion, while profit rose 47% to $358 million. Gains from higher prices were tempered by rising costs for operations and retirement benefits, Caterpillar said.