NEW YORK (Reuters) — Diversified manufacturer Ingersoll-Rand Co. Ltd. reported lower first-quarter profits on Friday, as the downturn in US home construction hurt demand for Bobcat loaders and excavators used in construction.But the results beat Wall Street forecasts on strong international sales, and shares rose three percent in early trading to their best level in almost a year.

“We expect steady growth in most of our worldwide end-markets for the balance of 2007,” chief executive Herb Henkel said on a conference call.

Earnings fell 14 percent, to $217.5 million, or 70 cents a share, from $253.2 million, or 76 cents a share, a year earlier.

Analysts, on average, expected profit of 69 cents a share, according to Reuters Estimates.

Revenue rose six percent to $2.67 billion, compared with Wall Street forecasts for sales of $2.77 billion. US sales were lower, but revenue from international operations jumped 18 percent, led by Europe. A weaker US dollar boosted sales by two percentage points.

“The big surprise is how strong Europe is, and that is the focus for Ingersoll-Rand,” said Longbow Research analyst Eli Lustgarten.

Three of the divisions reported higher quarterly sales and profits. Its biggest segment, compact vehicle, which includes Bobcat machines, reported slightly lower revenue and an 18 percent slide in profit.

Bobcat profits were showing signs of stabilising, Lustgarten said.

“You have to resize the business to the new level of activity, and they did a lot of that in the fourth quarter. If you take a big inventory hit, your margin begins to stabilise.”

So-called recurring revenue from parts, service, and used equipment rose by 12 percent, accounting for more than a fifth of total sales.

Bermuda-registered Ingersoll — whose portfolio ranges from refrigerated trailers used to transport food, to air compressors, golf carts and Schlage locks — said it expected to spend $2 billion this year on share repurchases and acquisitions, double its earlier estimate.

“Security technologies delivered stronger than anticipated revenues ... despite the slowdown in residential related markets,” Bear Stearns analyst Ann Duignan said in a research note.

She also noted Ingersoll’s buyback and acquisition budget could mean an accelerated share repurchase, which historically leads a stock to outperform the broader market.

CEO Henkel said costs of commodities like copper and zinc remained a concern, with its raw materials bill expected to increase by up to $80 million this year, higher than it earlier estimated. Henkel said North American residential construction was likely to remain soft this year, offset by solid commercial construction and a strong global industrial market, and steady demand for golf carts.

Ingersoll estimated second-quarter profit in a range of 93 cents to 98 cents a share, and 2007 earnings of $3.45 to $3.55 a share, cutting its forecast by 5 cents on either end. Analysts on average expected 2007 profit of $3.52.