Caterpillar shares fall on equipment demand concerns despite earnings beat

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Caterpillar shares fall on equipment demand concerns despite earnings beat

© Reuters. A Caterpillar 777 autonomous mining truck is displayed during CES 2023, an annual consumer electronics trade show, in Las Vegas, Nevada, U.S. January 6, 2023. REUTERS/Steve Marcus/ File Photo

Executives attempted to assuage investor concerns on a conference call. Chief Financial Officer Andrew Bonfield said that dealer inventories for construction equipment are"within the typical three-to-four month sales range." Caterpillar's profit has also benefited from effective cost controls and price hikes shielding margins amid ongoing inflationary pressures.Executives reiterated that demand for heavy machinery from construction and mining industries was expected to drive full-year operating margin slightly above its targeted range. The company had forecast an adjusted operating profit margin between 10-13% and 18-21% when it reported fourth-quarter results on Jan. 31.

The company has ramped up production to make up for sales missed during the pandemic when components were unavailable but is still navigating supply chain challenges, primarily with its large engines.

 

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