UPDATE 4-Caterpillar sales soar, warns of margin pressure

Public spending like U.S. President Joe Biden's $1 trillion infrastructure law are giving Caterpillar's customers the confidence to buy new equipment, Bonfield told investors on a call. Even so, company said it expects headwinds to its adjusted operating profit margin in the first quarter versus a year earlier, but sees improvement throughout the rest of the year.

Caterpillar Inc topped Wall Street estimates with a fourth quarter revenue increase of more than 20 percent, but the heavy-equipment maker warned operating margins in the current quarter could be hit by higher production and labor costs. Shares of the world's largest construction and mining equipment maker fell 4.6 percent in early New York Stock Exchange trading.

Factory shutdowns, clogged ports and labor shortages triggered by the pandemic have hammered companies across industries over the last year, causing manufacturing costs to soar and production lines to freeze. “Supply chain has been a wild card for all of us in 2021,” Chief Financial Officer Andrew Bonfield told Reuters in an interview. "As we continue to have factories and labor available, and supply chain constraints alleviate, we are able to meet underlying customer demand.”

Caterpillar said it expects to raise prices again this year, after hiking rates twice last year, to help mitigate some of the soaring costs. Public spending like U.S. President Joe Biden's $1 trillion infrastructure law are giving Caterpillar's customers the confidence to buy new equipment, Bonfield told investors on a call.

Even so, company said it expects headwinds to its adjusted operating profit margin in the first quarter versus a year earlier, but sees improvement throughout the rest of the year. Total revenue rose 23% to $13.80 billion in the fourth quarter as construction demand across most of its regions saw unprecedented public spending.

Analysts, on average, had estimated revenue of $13.15 billion, according to Refinitiv data. The company reported a profit of $2.12 billion in the quarter ended Dec. 31, compared with $780 million a year earlier. On an adjusted basis, Caterpillar earned $2.69 per share, topping analysts estimates for $2.26 a share, according to Refinitiv I/B/E/S.

 

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