Caterpillar Inc reported a 29 percent rise in first-quarter profit on Wednesday and beat analyst expectations as the company relied on its growing mining business and sales to buyers looking to replace aging equipment.

The world's largest maker of construction machinery also increased its profit guidance for the year, but the new forecast may not be strong enough to comfort investor concern over the state of the global economy. Shares of Caterpillar slipped about 1.1 percent in premarket trading.

The quarter was good, but guidance was only increased by the amount of the beat and revenue guidance was unchanged, Jefferies & Co equities analyst Stephen Volkmann said in a note to investors. He said the company's growing inventory levels may raise some investor concerns.

Caterpillar is utilizing its strength in the mining business -- bolstered by its 2011 acquisition of Bucyrus and healthy commodity prices -- to ride out softening conditions in key emerging markets and a weak construction market. In addition, North American customers are scrambling to replace aging machinery, including excavators and bulldozers.

Like many of its peers in the industrial sector, Caterpillar continues to steadily outperform Wall Street expectations and is predicting another record year in 2012. An improving economy is partially underpinning the performance of these companies.

We remain on track...at a time when construction activity remains depressed and economies in Europe, China and Brazil have slowed, Caterpillar Chief Executive Doug Oberhelman said in a press release. Although it's tough to predict the exact timing, we expect positive economic growth moving forward.

RECORD EPS

The slowing in China and Brazil comes as those countries took steps in 2011 to slow their economies and bring inflation under control, Oberhelman said. Both economies are expected to ease their policies, Caterpillar said.

Caterpillar reported net earnings of $1.6 billion, or $2.37 per share, compared with $1.2 billion, or $1.84 per share, a year earlier. The company said the first-quarter earnings per share figure was its highest on record.

Caterpillar's sales rose 23 percent to $16 billion during the first quarter, the company said.

Analysts on average had projected a profit of $2.13 a share, according to Thomson Reuters I/B/E/S. Revenue, however, fell short of the $16.2 billion that Wall Street had expected.

The company increased its profit outlook for the year to $9.50 per share from $9.25 previously. Caterpillar, however, kept its outlook for revenue in the range of $68 billion to $70 billion.

Investors have been closely monitoring the company's order backlog, which had grown to nearly $30 billion by the end of 2011. The backlog continued to grow in the first quarter, ending at $30.7 billion, the company said.

The order backlog stood at $21 billion a year ago.

During the first quarter, each of Caterpillar's business units posted revenue and profit increases.

The resources segment, which includes mining, was the top performer, delivering a 73 percent increase in revenue and a 46 percent jump in earnings. Construction products, the biggest of Caterpillar's businesses, reported a 13 percent increase in both sales and profit, the company said.

(Reporting By John D. Stoll; Editing by John Picinich)

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