NEW YORK (Bloomberg) ? Ingersoll-Rand Co., the maker of Bobcat machinery and Thermo-King refrigerated trucks, said its second-quarter profit rose ten percent, led by sales of equipment used in commercial construction.

Earnings from continuing operations increased to $322 million, or 97 cents a share, from $291.8 million, or 85 cents, a year earlier. Sales rose ten percent to $3.04 billion, the Bermuda-based company said in a statement on Friday.

Profit margins narrowed at the climate control, security and refrigeration units, primarily on higher material costs. Companywide orders rose 14 percent, helped by sales of Bobcats for construction overseas. Chief executive officer Herbert Henkel said in June he plans about $400 million in acquisitions this year as he builds areas such as security and refrigeration.

"Overall operating margin was flat, given material cost inflation," said John Hingher, an analyst at Standard & Poor's in New York who rates the shares "strong buy" and said he doesn't own them. Still, the orders show "the company is well positioned to benefit from continued strength in many of its key end markets."

The company may raise prices as much as three percent to temper rising raw material and transportation costs, J.P. Morgan analyst Gary McManus said in a note to clients this month. McManus rates Ingersoll-Rand "neutral."

Profit margins at the climate control unit, which makes display cases and transportation equipment for temperature sensitive products, narrowed to 11.1 percent from 11.5 percent on higher raw material costs and inventory adjustments.

Security unit margins shrank to 16.8 percent from 17.9 percent on prices for non-ferrous metal and increased investment in new products. The unit makes locks and security software.

Margins at the industrial technology unit, which makes air compressors, tools and energy-generation systems, narrowed to 13 percent from 13.7 percent on material costs, increased sales of less profitable products and a four-week work stoppage at an air compressor plant in India.

The company, run from Montvale, New Jersey, last year sold Dresser-Rand Group Inc., an oil-exploration equipment maker, for $1.2 billion to First Reserve Corp., a private buyout firm specialising in energy-industry acquisitions.

Including the discontinued operations, net income increased 9.8 percent to $313.5 million, or 95 cents a share, from $285.4 million, or 83 cents, a year earlier.

In April, Ingersoll-Rand forecast net income of 90 cents to 95 cents a share in the quarter, with profit from continuing operations of 92 cents to 97 cents. McManus expected 95 cents.

Forecasts

The company raised its forecast for the year, helped by a boom in construction overseas in countries such as India and China, where Bobcat machines are used to build roads.

Ingersoll-Rand said profit from continuing operations will be $3.57 to $3.67 this year. Analysts on average expected $3.52, according to Thomson Financial. Net income for the year will be as much as $3.55.

Net income will be 82 cents to 87 cents a share this quarter, with profit from continuing operations at 85 cents to 90 cents, the company said. Analysts on average expected 87 cents, according to a survey of 13 by Thomson.