Caterpillar profit surges as machine demand jumps
CATERPILLAR posted a first-quarter profit that exceeded analysts’ expectations, a sign that economic weakness around the world has failed to dent demand for heavy equipment.
The Irving, Texas-based company reported adjusted earnings per share of US$4.91, beating the US$3.82 average estimate of 23 analysts polled by Bloomberg. Caterpillar’s machines are critical to the construction, mining and energy industries, and it’s viewed as bellwether for the global economy.
Caterpillar is one of the biggest producers of heavy machinery, with its iconic yellow diggers and bulldozers dotting construction sites, mines and oil fields in every corner of the globe. But doubts have begun to creep in about construction demand in North America, Caterpillar’s biggest segment. That’s been exacerbated by the regional banking crisis and concern over the US economy, leaving executives worried about a late-year slowdown.
There was “healthy demand during the first quarter”, chief executive officer Jim Umpleby said in a statement.
Sales volumes of construction equipment in North America rose as dealers boosted their inventories of machines, the company said. Similarly, mining equipment sales rose but was partially offset by higher manufacturing costs, especially for materials.
Since the pandemic began, Caterpillar has battled rising freight rates, surging materials costs and a global supply chain crisis, which all ate into profit margins. The company has repeatedly raised prices to offset these headwinds. Shares are down more than 9 per cent this year despite assurances from Caterpillar and other machinery producers that customer demand will remain strong through the year.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Analysts at Jefferies expect infrastructure projects and other government investments to offset any weakness in the construction industry, along with anticipated demand growth in the mining and energy industries.
Caterpillar shares rose 3.2 per cent to US$223 before the start of regular trading in New York. BLOOMBERG
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Companies & Markets
UBS weighs synthetic risk transfer amid capital boost proposals
Oil settles higher on supply concerns in the Mid-East, economic woes subdue gains
S-Reits falter as investors weigh possibility of zero rate cuts in 2024
CapitaLand Investment posts total revenue of S$650 million for Q1
Europe: Stoxx 600 logs best day in three months as banks shine
US: Stocks rally after strong tech results