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Caterpillar's profits hit by rising material costs

Caterpillar, world's largest maker of construction equipment, third-quarter profit have slipped 6 per cent despite record global sales for the group.

The company blamed rising material costs for the profit dip.

"Higher material costs, especially for steel, were the most significant headwind we faced," said Jim Owens, Caterpillar's chairman in a statement.

The company backed its sales and earnings targets for this year to top $50 billion, up from $44.96 billion last year, but was more cautious about the outlook for 2009, with flat sales and revenues compared with this year.

"The 2009 economic outlook is extremely uncertain at this time, with substantial turmoil in financial markets and unprecedented government intervention around the world," said Owens.

“Our current outlook for 2009 calls for sales and revenues to be about flat with our full-year 2008 results. In 2009 we expect pockets of strength in global mining, energy markets and in the area of emerging market infrastructure development to offset acute weakness in North America, Europe and Japan."

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