Caterpillar sees challenges in strong dollar, weak oil, unrest

CHICAGO (Reuters) - CATERPILLAR (CAT.NY)Inc on Thursday gave a somber outlook for the rest of 2015, facing stiffening competition thanks to the strong U.S. dollar, weak oil prices bringing a tough energy equipment market and geopolitical tensions posing risks to growth.

"We're still very much focused on market share but ... the competition for every deal has got greater as we've seen the dollar strengthen," chief executive Doug Oberhelman said in a call with analysts.

The world's largest construction and mining equipment maker reported a better-than-expected quarterly profit despite lower sales. It maintained its 2015 forecast and raised its full-year earnings per share outlook.

Peoria, Illinois-based Caterpillar said the strong dollar lowered the cost of imported goods in the first quarter, especially from Japan.

The company said it expected sales and profit for the remaining three quarters of the year to be lower than the first quarter.

Caterpillar reported quarterly net income of $1.11 billion or $1.81 per share, up 20 percent from $922 million or $1.44 per share a year earlier. Excluding restructuring costs, earnings per share totaled $1.86. Analysts expected earnings per share of $1.35.

The profit beat came despite a 4 percent decline in sales to $12.7 billion from $13.24 billion a year earlier. That also beat analyst estimates of $12.38 billion.

Energy and transportation sales rose slightly, but Caterpillar said that was unlikely to continue amid low oil prices. The company's mining equipment business has already suffered as commodity prices have fallen, while construction equipment sales in North America have remained a bright spot.

The company said it expected global gross domestic product growth to hit 2.7 percent in 2015, slightly higher than the 2.6 percent growth in 2014.

But it said "risks and uncertainties" including political conflicts and social unrest in the Middle East, Africa and the former Soviet Union could temper growth.

Caterpillar also cited "ongoing uncertainty" over U.S. monetary policy actions.

Chief financial officer Brad Halverson told Reuters Caterpillar hopes the U.S. Federal Reserve takes a cautious approach to raising interest rates, as the company is concerned that raising rates too quickly could cause an economic slowdown.

"It's a question of not moving too fast," Halverson said.

Caterpillar maintained its 2015 sales outlook of $50 billion and raised its earnings per share forecast to $4.70 from its previous forecast of $4.60.

Caterpillar shares were up 45 cents or 0.55 percent at $85.32.

(Editing by Alden Bentley and Ted Botha)

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