Caterpillar Inc. finished fiscal 2018 on a solid profit note, but not nearly at the level expected by analysts.

The manufacturer reported Monday $1.05 billion in fourth-quarter profit after having a loss of just under $1.3 billion a year ago. Sales rose 10.8 percent to $14.3 billion.

Diluted earnings were $1.78 compared with a loss of $2.18 a year ago. Caterpillar took charges worth 77 cents in the quarter.

The average earnings forecast was $2.89 by nine analysts surveyed by Zacks Equity Research. Analysts typically do not include one-time gains and charges in their forecasts.

Investors sent Caterpillar’s share price down as much as 10 percent in trading before closing off 9.1 percent, or by $12.49. to $124.37.

Analysts have been bullish about Caterpillar’s benefiting from expanded infrastructure spending in the United States and globally on machinery and products in the construction, energy and mining sectors.

Caterpillar is considered a bellwether for the global economy, particularly as it relates to those sectors.

However, Caterpillar has indicated it is experiencing higher manufacturing costs from steel prices as a result of the U.S.-China tariffs dispute. Operating costs rose 8.2 percent to $12.5 billion.

The biggest factor between the two quarterly reports is that Caterpillar had $321 million in its income-tax provision for the fourth quarter of 2018, compared with $2.42 billion in the fourth quarter of 2017.

The federal corporate tax-rate cut that went into effect Jan. 1, 2018, were the main factor in the difference. Caterpillar took in the fourth quarter of fiscal 2018 an additional $50 million increase for the cost of mandatory deemed repatriation of non-U.S. earnings.

The company has a railroad-equipment production plant in Winston-Salem with 160 employees at last count.

Caterpillar did not have an update on a January 2018 report that it was considering closing its Progress Rail engine-manufacturing plant in LaGrange, Ill., potentially affecting more than 600 jobs. It said at that time it could move manufacturing and assembly production to other U.S. subsidiaries, with the Winston-Salem plant specifically mentioned.

For the full year, Caterpillar had $6.15 billion in net income, compared with $754 million a year ago. Diluted earnings were $10.26 and adjusted earnings were $11.22

“In 2018, Caterpillar achieved record profit per share and returned significant levels of capital to shareholders,” Jim Umpleby, Caterpillar’s chairman and chief executive, said in a statement.

The manufacturer issued its initial fiscal 2019 financial outlook, with earnings in a range of $11.75 to $12.75 a share.

“Our outlook assumes a modest sales increase based on the fundamentals of our diverse end markets, as well as the macroeconomic and geopolitical environment,” Umpleby said.

Goldman Sachs analyst Jerry Revich said the company’s fiscal 2019 guidance is “broadly in-line with expectations when adjusting for higher tax rate guidance.”

“The mid-point of $12.25 embedding a 35-cent earnings per share drag from a 26 percent tax rate vs. our model of 24 percent, and an unspecified restructuring headwind.”

Each of Caterpillar’s three main divisions had a sharp fourth-quarter revenue increase: 8 percent in construction industries to $5.7 billion; 11 percent for energy and transportation (which includes the Winston-Salem plant) to $6.29 billion; and 21 percent in resource industries to $2.78 billion.

North America sales rose 17 percent to $2.75 billion, while Asia/Pacific fell 4 percent to $1.48 billion, the markets of Europe, Africa and Middle East were up a combined 9 percent to $1.06 billion and Latin America fell 5 percent to $374 million.

The company said its restructuring costs for fiscal 2019 “are expected to return to normalized levels.” The company’s overall workforce increased by 6.2 percent year over year to 124,000 and is up 900 from Sept. 30. That represented 104,000 full-time employees and 20,000 part-time and contract employees.

The U.S. workforce increased year over year by 3,200 to 53,700, including up 300 from Sept. 30, while the non-U.S. workforce was up by 4,100 to 70,300, including up 600 from Sept. 30.

rcraver@wsjournal.com 336-727-7376 @rcraverWSJ

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