Recent earnings reports from machinery makers Caterpillar Inc. (NYSE:CAT) and Deere & Co. (NYSE:DE) have been weak, but getting better. Caterpillar reported fourth-quarter and full-year 2009 earnings in January and Deere reported first quarter 2010 earnings in February. Today, CNH Global NV (NYSE:CNH) reported first quarter earnings and the news from the machinery makers looks like it’s getting better all the time.

CNH reported EPS of $0.16, before items, up from an EPS loss of -$0.53 in the same period a year ago. Sales rose 6.1%, from $3.05 billion a year ago to $3.24 billion. Analysts were expecting EPS of $0.05 on sales of $2.94 billion, so CNH beat estimates handily.

The company’s sales of agricultural machinery grew 14% year-over-year, with particularly strong growth in Latin America and sharp declines in Western Europe. The company doesn’t break out sales in China specifically, but lumps them in with the ‘Rest of World’ category, which also had a greater than 50% sales surge in construction machinery sales “dominated by demand in China on the back of infrastructure and commodity related spending.”

For the rest of 2010, CNH expects the agriculture equipment market to be flat to an increase of 5%. Construction machinery markets are expected to grow 15%-20% for the year. Caterpillar expects sales to rise 10%-25% in 2010, while Deere is looking at sales growth of 6%-8% for the year.

Like its competitors, CNH and its dealers had to work through a number of inventory issues coming out of a very weak 2009, which Caterpillar’s chairman/CEO described as “the worst our company has experienced since the Great Depression.”

CNH and Caterpillar have committed themselves to growing share in the Chinese market. Deere does about two-thirds of its business in North America, and never specifically mentions China in its last quarterly report.

Caterpillar is scheduled to report first quarter earnings next week, and analysts are expecting EPS of $0.40 on revenues of $8.63 billion. Last quarter Cat posted EPS of $0.39 on revenues of $7.9 billion.

Deere reports its second quarter earnings in May, and analysts expect EPS of $1.07 on revenues of $6.62 billion. In its last quarterly report, Deere posted EPS of $0.57 on revenue of $4.84 billion.

CNH’s earnings beat expectations, but so far today that hasn’t boosted the share price much. In fact, both Caterpillar and Deere are getting a stronger uptick than CNH. So it goes.

Paul Ausick

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