News Home » World » Caterpillar warns of margin pressure as production costs bite

Around the World

Caterpillar warns of margin pressure as production costs bite

Randy Mancini 3 Jan 28
FILE PHOTO: Caterpillar equipment at a retail site in San Diego California
FILE PHOTO: Caterpillar Inc. equipment is on display for sale at a retail site in San Diego, California, U.S., March 3, 2017. REUTERS/Mike Blake/File Photo

January 28, 2022

(Reuters) -Caterpillar Inc warned on Friday its first-quarter operating margins could take a hit from higher production and labor costs, taking some of the shine off the company’s surging sales.

The world’s largest heavy-duty equipment maker’s shares fell 1.6% in premarket 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.

Caterpillar said it expects to raise prices again this year, after hiking rates twice last year, to help mitigate some of the soaring costs.

Still, the company’s total revenue rose 23% 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.

(Reporting by Uday Sampath in Bengaluru; Editing by Shinjini Ganguli and Shounak Dasgupta)