Caterpillar last week reported 2006 sales and revenue of $41.5 billion and profit of $3.5 billion, or $5.17 per share, a 28-percent increase from 2005. It marked the fourth consecutive year of double-digit profit growth and third straight year of record sales and profits.

The Peoria, Ill.-based manufacturer also reported a record fourth quarter, with sales and revenues of $11 billion and profit of $882 million, or $1.32 per share, a 10-percent increase from the fourth quarter of 2005.

Sales and revenues increased $5.2 billion year over year — $3.3 billion from higher sales volume, $1.5 billion from improved price realization, $315 million from higher financial products revenues and $78 million from the effects of currency.

Profit increased $683 million year over year, largely because of improved price realization and higher sales volume, partially offset by higher core operating costs.

For the fourth quarter, sales and revenue increased $1.3 billion — $951 million from higher sales volume, $190 million from improved price realization, $146 million from the effects of currency and $53 million from higher financial products revenues. Fourth quarter profit increased $36 million from 2005, as a result of improved price realization and higher sales volume.

“We took advantage of our financial success — including strong cash flow — to fund growth in capacity, continue aggressive new product development, complete the strategic acquisition of Progress Rail, increase the dividend rate by 20 percent and buy back more than $3 billion in stock,” said chairman and CEO James Owens. “These actions will deliver long-term benefits for our customers, employees and stockholders.”

Caterpillar expects another record year in 2007 with sales and revenues in a range of $41.5 to $43.6 billion, ranging from flat to a 5 percent increase, and expects profit in a range of $5.20 to $5.70 per share.

“Despite a sharp decline in two key North American industries — on-highway truck engines and U.S. housing — and an unexpected reduction in dealer inventories, we are projecting another record year in 2007,” Owens added. “We expect to improve profit per share at a higher rate than sales and revenues, and that means a key focus in 2007 will be cost management.”

Looking ahead several years, Owens added: “We’re well-positioned to build on the extraordinary results we’ve delivered over the past few years. Our investment in new products has given us our strongest product line in history, and we’re continuing to invest in facilities around the globe to add capacity and improve our operations. Quality, velocity, process excellence with 6 Sigma and engaged employees are the foundations of our strategy to deliver financial results through the end of the decade that should be very rewarding to our stockholders. We are projecting sales and revenues in excess of $50 billion and compound annual growth in profit per share of 15 to 20 percent from 2005 to 2010.”

In addition to being the world’s largest manufacturer of construction equipment, Caterpillar is the world’s largest rental company with 1,639 rental locations around the world. Nearly a quarter of the RER 100 companies are Caterpillar dealers.