Construction Demand Lifts Caterpillar Profit as Order Backlog Grows

“Demand is strong but the ability of us to meet that demand is dependent on the unwinding of some of the supply chain challenges,” said

Andrew Bonfield,

Caterpillar’s chief financial officer. “The key for us is to reduce the bottlenecks as much as possible.”

Caterpillar’s shares fell 2% in premarket trading as the company said a profit measure would decline in its first quarter from the same period in 2020.

Caterpillar and other manufacturers have been dealing with port delays, higher trucking and flying costs, and difficulties obtaining enough parts and computer chips. Many of the problems have been driven by strong orders across the board, stretching the economy’s ability to make enough products, manufacturers said.

“They want us to meet their demand,” Mr. Bonfield said. “They need those machines to do their work.”

Factory shutdowns in some parts of China, driven by a recent increase in Covid-19 cases, has been another challenge for Caterpillar.

Caterpillar said a strong global economy was leading to more orders from customers, as well as less trouble paying their outstanding bills. The company said the percentage of past dues in its financial arm were the lowest in 15 years, declining to 1.95% at the end of 2021 compared with 3.49% at the end of 2020.

The Deerfield, Ill.-based maker of construction bulldozers and mining drills said revenue grew 23% to $13.8 billion in its fourth quarter. The company’s cost of goods sold increased 29% to $10 billion.

The company earned a profit of $3.91 a share, compared with $1.42 a share a year earlier. Total profit in the quarter was $2.12 billion, up from $780 million in the same period the year before. The increase was driven by remeasurement of pension assets.

On an adjusted basis, Caterpillar’s profit was $2.69 a share. Analysts surveyed by FactSet had forecast adjusted earnings of $2.26 a share.

Higher manufacturing costs more than offset Caterpillar’s price increases. Higher prices added $507 million to operating profit while higher manufacturing costs reduced it by $816 million.

The company’s operating profit margin, a profit measure, was 11.7% for the quarter, down from 12.3% in the same period a year earlier.

Construction sales and mining sales both climbed by 27%, while energy and transportation sales rose by 19%.

Write to Austen Hufford at [email protected]