Caterpillar Inc recorded a fivefold profit surge and raised its 2011 profit forecast as customers bought new heavy equipment to replace old machines that aged during the economic downturn.

The world's biggest maker of earth-moving gear said on Friday that strong demand for equipment used in mining helped revenue rise, while demand for construction equipment has been slower to recover -- a trend that it said allows it plenty of room to grow sales and profit in the coming years.

It raised its full-year profit forecast to a range of $6.25 to $6.75, a range that at its midpoint is 24 cents above Wall Street's prior forecast and suggests growth of about 57 percent from last year.

If you really look at what's happening in the United States, it's a very slow recovery from very low numbers, said Chief Executive Doug Oberhelman on a conference call with analysts. When construction activity rebounds in the developed world, call it the United States and Western Europe, we're going to be ready.

Still, given that the company beat analysts' first-quarter profit expectations by 53 cents per share, the full-year forecast suggests the company will not continue its torrid pace through the rest of the year, said Edward Jones analyst Jeff Windau.

They have had a strong recovery but now the comparables get a little tougher, Windau said. I would expect the growth is going to moderate through the rest of 2011.

RISING ROLE FOR COMMODITIES

The report comes a day after government figures showed that economic growth in the United States slowed sharply in the first quarter, with higher food and gasoline prices starting to weigh on consumer spending and sparking concern about inflation.

Commodity inflation is not necessarily bad news for companies including Caterpillar and General Electric Co that make equipment used in energy production and commodity extraction. Rising demand for and prices of metals, coal and oil are spurring demand for Caterpillar's heavy equipment -- its sales to miners and other resource companies nearly doubled in the quarter, outpacing its construction equipment business.

The strong commodity markets for us are a net positive based on the demand they drive for our mining business, offsetting margin pressure from higher raw materials costs, said Chief Financial Officer Ed Rapp in an interview.

Caterpillar's exposure to commodities including metals and coal will only increase when it closes on its $7.6 billion acquisition of mining equipment maker Bucyrus International by the middle of this year.

The better-than-expected results get the company closer to its goal of being able to close that deal without issuing additional equity, Rapp said. When the takeover was first announced, Caterpillar said it might need to issue up to $2 billion of stock to cover the purchase.

PROFIT TOPS STREET VIEW

Caterpillar reported first-quarter profit of $1.23 billion, or $1.84 per share, compared with $233 million, or 36 cents per share, a year earlier. Analysts expected profit of $1.31 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 57.2 percent to $12.95 billion, above expectations of $11.69 billion.

It's a huge number on huge volume, that's the simplest way of describing it, said Longbow Research analyst Eli Lustgarten. He said revenue came in more than $1 billion above forecasts.

Caterpillar joins a string of strong earnings reports from industrials ranging from 3M Co to Komatsu Ltd.

Its shares were up 2.6 percent at $115.58 on the New York Stock Exchange; earlier they hit a lifetime high of $116.25. As of Thursday's close, they had risen 63 percent over the past year, more than four times the pace of the rise in the Dow Jones industrial average, of which Caterpillar is a component.

Caterpillar said the aftermath of the Japan earthquake in March would lower its full-year results, pulling down revenue by about $300 million and operating profit by $100 million.

(Reporting by Scott Malone; editing by Robert MacMillan, John Wallace and Dave Zimmerman)

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