Caterpillar Inc reported a higher-than-expected quarterly profit and raised its sales forecast, sending its shares to an all-time high, as rising commodity prices increased mining industry demand for its earth-moving equipment.

The world's largest maker of construction and mining machines also sounded an upbeat note on the outlook for the global economy, including the developed markets that have lagged emerging markets in the recovery.

Over the past quarter we have become somewhat more positive about economic growth in the developed economies of North America, Europe and Japan, Mike DeWalt, the head of Caterpillar's investor relations unit, told analysts on a conference call.

One measure of Caterpillar's growing confidence: it is hiring again. The company, which cut nearly 30,000 full-time and contract jobs worldwide during the recession, said it rehired about 8,200 full-time workers in 2010 -- two-thirds of them outside the United States.

In addition, the company said it had hired another 11,000 contract workers -- about half of them in the United States.

Caterpillar also said it expects to post a 2011 profit near $6.00 per share, slightly above the market consensus of $5.86, according to Thomson Reuters I/B/E/S, and it said 2011 sales would top $50 billion, up from an earlier forecast that it would approach $50 billion.

We feel good, Doug Oberhelman, the company's chairman and chief executive, said in statement. The outlook reflects our expectation that the world economy will continue to recover.

Caterpillar said higher coal and metals prices were lifting machine sales in nearly every part of the globe, including North America, where sales more than doubled in the most recent quarter.

What we find particularly positive is that strong sales gains were recorded in all geographic regions, and we see that continuing in '11, Michael Jaffe, an analyst at Standard & Poor's Equity Research, said in a note maintaining his buy rating on Caterpillar.

On balance, the company benefits from higher commodity prices because the increased demand from miners more than offsets the added material costs it pays.

SOME SUPPLIER STRAIN

The past two years have been whiplash-inducing for the Peoria, Illinois-based company. In 2009, Caterpillar's sales tumbled 37 percent to $32.4 billion as the worldwide downturn prompted customers and dealers to cancel billions in orders.

Then, in 2010, they snapped back 31 percent to $42.6 billion, a rebound that has raised concerns about the company's suppliers.

In the most recent quarter, sales at the company, which also makes diesel engines, gas turbines and railroad locomotives, rose an eye-popping 62 percent over the year-ago period to $12.8 billion. For the most part, the supply chain dealt well with the surge, said Ed Rapp, Caterpillar's chief finance officer.

There are areas where it's under strain, Rapp said. We are marshaling resources into those key areas where we do have some bottlenecks to make sure that we can deliver.

For the most recent quarter, Caterpillar reported a net profit of $968 million, or $1.47 a share, up more than the 300 percent from the profit of $232 million, or 36 cents a share, it reported a year earlier.

Analysts on average had expected the company to earn $1.27 a share on sales of $11.63 billion, according to Thomson Reuters I/B/E/S.

Caterpillar said its order backlog stood at $18.7 billion at the end of 2010, nearly double what it was at the end of 2009.

Demand continues to be especially strong for mining equipment, the company said, with customers having to wait between eight and 18 months for delivery.

The volumes are terrific, said Eli Lustgarten, an analyst at Longbow Securities.

But Alex Blanton, an analyst at Clear Harbor Asset Management, called the company's margins disappointing.

DeWalt, Caterpillar's investor relations head, said that was a result of a very negative shift in sales mix with the company selling more lower-margin machines and engines. He said incentive-based compensation -- which ballooned from zero last year to $800 million this year -- contributed to the pressure.

The company's shares were up 1.7 percent at $97.35 on the New York Stock Exchange on Thursday afternoon. The stock hit an all-time high at $97.79 earlier in the session..

(Reporting by James B. Kelleher; Editing by Derek Caney and Matthew Lewis)

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