Caterpillar equipment at a retail site in San Diego, Calif., on March 3, 2017.Mike Blake/Reuters
Caterpillar Inc CAT-N topped Wall Street estimates with a fourth quarter revenue increase of more than 20 per cent, but the heavy-equipment maker warned operating margins in the current quarter could be hit by higher production and labour costs.
Shares of the world’s largest construction and mining equipment maker fell 2.4 per cent in Friday’s premarket trading.
Factory shutdowns, clogged ports and labour 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 labour 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.
The 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 per cent to $13.80-billion in the fourth quarter as construction demand across most of its regions saw an unprecedented level of 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.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.