Heavy equipment maker Caterpillar reported a jump in fourth-quarter earnings on surging demand for construction machinery, although sales faltered in the Asia-Pacific region.
The US company recorded higher sales across most of its businesses amid broad-based demand growth but warned that supply chain problems would probably continue to weigh on results in 2022.
Net income for the quarter was $2.1 billion, more than double the level in the 2020 period off of a 23 percent increase in revenues to $13.8 billion.
Caterpillar said it expects strong sales in the first quarter of 2022 compared with the year-ago period but that its profit margins faced “headwinds”.
“Sales decreased in Asia-Pacific primarily due to … lower end-user demand, partially offset by the impact from changes in dealer inventories,” Caterpillar said.
Lower sales in China were partially offset by higher sales across most of the rest of the region. Dealers decreased inventories during the fourth quarter of 2020, compared to an increase during the fourth quarter of 2021, the company said.
Jim Umpleby, chief executive, said on a conference call with analysts that Caterpillar’s revenues would have been even higher had it not faced supply chain problems that pinched production.
He said the company had kept underutilised factories open to meet customer demand despite higher expenses. Higher freight costs also cut into profit margins.
“Demand remains strong as represented by robust orders,” Umpleby said. “The key variable remains the supply chain, meaning to what degree can we meet end-demand growth.”
The company said it expects price increases to offset manufacturing costs increases in 2022. Its shares fell 2.1% to $207.64 in pre-market trading.
- AFP, with additional editing by George Russell
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