NEW YORK (AP) -- Caterpillar used a combination of cost-cutting and strong sales of construction equipment to deliver a fourth-quarter profit that topped Wall Street estimates and gave the sagging stock market some needed support.
The Peoria, Ill., company has been buffeted by a sharp downturn in the global mining industry. Sales of mining equipment plunged 48 percent in the fourth quarter and profit in the mining business dropped 77 percent. As sales of large tractors and mining loaders slumped last year, Caterpillar shut plants and cut jobs. Those moves helped slash overall operating costs by $2 billion in the fourth quarter.
Strong results in construction and power systems also made up for the shortfall in mining. The construction business posted an operating profit of $500 million in the quarter, compared with just $26 million in the same quarter a year ago, aided by increased spending in the U.S. And Caterpillar's profit from industrial engines and power generators rose 38 percent to $964 million.
Caterpillar's outlook for 2014 is also slightly better that what Wall Street is projecting. And the company's board approved a new $10 billion buyback.
That was all welcome news for investors. Caterpillar is one of the 30 stocks in the Dow Jones industrial average, so its 4 percent increase Monday helped limit losses in the benchmark index. The Dow can use the assist _ it plunged nearly 500 points over Thursday and Friday. It was down 70 points, or 0.4 percent, at 15,809 in afternoon trading.
Caterpillar shares rose $3.42 to $89.59. The stock gained just 1.3 percent last year, compared with a 27 percent increase in the Dow.
One recent concern for the stock market has been growth in China. Caterpillar said sales in China rose 20 percent in 2013. For this year, Caterpillar expects China's economy to grow slightly more than 7.5 percent _ about the same as this year. That should boost sales of excavators and other machinery, the company said.
Overall, for the three months ended Dec. 31, Caterpillar Inc. earned $1 billion, or $1.54 per share. That compares with $697 million, or $1.04 per share, a year earlier. The result topped analysts' forecast for a profit of $1.27, based on a survey by FactSet.
Revenue declined 10 percent to $14.4 billion from $16.08 billion, but still beat Wall Street's forecast of $13.41 billion.
Caterpillar said full-year net income dropped to $3.79 billion, or $5.75 per share, from $5.68 billion, or $8.48 per share, in the previous year. Annual revenue fell 16 percent to $55.66 billion from $65.88 billion.
For 2014, the company anticipates adjusted earnings of $5.85 per share on revenue of about $56 billion. Analysts predict earnings of $5.75 per share on revenue of $55.36 billion, on average.