AP

Caterpillar sales surge in first quarter, but so do costs

Apr 27, 2022, 4:02 PM | Updated: Apr 28, 2022, 9:01 am

FILE - This May 8, 2019 photo shows a Caterpillar 279D Compact Track Loader, left, and 308E2 CR Min...

FILE - This May 8, 2019 photo shows a Caterpillar 279D Compact Track Loader, left, and 308E2 CR Mini Hydraulic Excavator, right, rear, at a demolition site in Fort Lauderdale, Fla. Caterpillar’s first-quarter sales climbed as construction equipment demand continues to surge, Thursday, April 28, 2022, even though supply chain challenges still plague most industries. Sales rose 14% to $13.59 billion, topping the $13.5 billion that analysts surveyed by Zacks Investment Research were looking for. (AP Photo/Wilfredo Lee, File)

(AP Photo/Wilfredo Lee, File)

Caterpillar’s first-quarter sales climbed on strong demand for construction equipment despite supply chain challenges that continue to plague businesses ranging from car and phone makers to grocery stores.

And the Deerfield, Illinois, manufacturer is not immune to surging inflation that has run up costs for both consumer and companies across the globe.

Costs and expenses jumped 13% from last year to $11.73 billion. The company said rising manufacturing expenses primarily reflected more expensive material and freight costs. The company’s operating profit margin was 13.7% for the first quarter of 2022, compared with 15.3% for the first quarter of 2021.

The company also noted slowing sales in China due to COVID-19 and weakening residential construction.

Shares of Caterpillar Inc. slid 5% Thursday.

Overall sales rose 14% to $13.59 billion, topping the $13.5 billion that analysts surveyed by Zacks Investment Research were looking for. Higher prices also fueled revenue numbers.

Construction industry sales increased 12%, propelled by increased prices, changes in dealer inventories and higher end-user demand for aftermarket parts.

Sales in the resource industries division jumped 30% on higher sales volume and higher prices. The sales volume was impacted by better demand for equipment and aftermarket parts and changes in dealer inventories.

Housing demand has been on fire during the pandemic as millions of people relocated or buy a first home, but rising mortgage rates may start to dampen that. A run-up in rates is setting the stage for a slowdown in home sales this year as increased borrowing costs reduce would-be buyers’ purchasing power.

Also in China, Beijing has tightened controls on debt to stabilize its construction sector, and some of those maneuvers may have played out in Caterpillar’s performance there.

“In the first quarter of 2022, China was lower than we expected due to weaker residential construction and COVID-19-related shutdowns,” said CEO James Umpleby. “Overall, sales in China were about half the level we saw in the prior year’s quarter.”

Caterpillar Inc. earned $1.54 billion, or $2.86 per share, for the three months ended March 31.

Stripping out certain items, earnings were $2.88 per share. Wall Street expected $2.66 per share.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Image: A cargo ship is stuck under the part of the structure of the Francis Scott Key Bridge after ...

Associated Press

Authorities identify 2 bodies recovered at site of Baltimore bridge collapse

A major bridge in Baltimore snapped and collapsed after a container ship rammed into it early Tuesday, and several vehicles fell into the river below.

23 hours ago

Photo: Mountaineer Jim Whittaker has died at 95....

Gene Johnson, The Associated Press

Lou Whittaker, among the most famous American mountaineers, has died at age 95

Lou Whittaker, a legendary American mountaineer who helped lead ascents of Mount Everest, K2 and Denali, has died at age 95.

24 hours ago

File photo: Former Sen. Joe Lieberman speaks in Washington on Jan. 18, 2024....

Associated Press

Former Sen. Joe Lieberman, Democrats’ VP pick in 2000, dead at 82

Former U.S. Sen. Joe Lieberman of Connecticut, who nearly won the vice presidency on the Democratic ticket with Al Gore in 2000, has died.

1 day ago

islamic state attack...

Vanessa Gera, The Associated Press

What we know after the Islamic State group claims responsibility for Moscow massacre

The Islamic State group has claimed responsibility for an attack on a suburban Moscow concert hall that killed at least 133 people.

4 days ago

Moscow shooting...

The Associated Press

Russia: 60 dead, 145 injured in concert hall raid; Islamic State group claims responsibility

Assailants burst into a concert hall in Moscow on Friday and sprayed the crowd with gunfire, killing over 60 people, injuring more than 100.

6 days ago

Photo: Britain's Kate, Duchess of Cambridge visits 282 (East Ham) Squadron, RAF Air Cadets, Cornwel...

Associated Press

Kate Middleton announces she has cancer, is undergoing chemotherapy

Kate Middleton, Princess of Wales, says she is undergoing chemotherapy to treat cancer. She has been out of view since Christmas.

6 days ago

Caterpillar sales surge in first quarter, but so do costs