Caterpillar may hike prices further, experiencing production delays

Caterpillar said on Thursday, October 28, that inflation may force further price hikes across the board as the manufacturer tries to navigate through production delays after reporting a quarterly profit on Thursday that beat analysts’ estimates.

“This has been the first quarter where it (supply chain challenges) started to impact us significantly,” chief financial officer Andrew Bonfield told Reuters, adding that the company had not experienced any shutdowns yet.

Global supply chain disruptions triggered by the pandemic and inflationary cost pressures have hit the company’s earnings in the recent past, with Caterpillar raising equipment prices already twice this year to offset the impact.

Bonfield did not specify, but said the company was reviewing further price increases “across the board” to tackle higher costs.

Disruptions at one of the world’s largest construction and machinery companies could ripple through several industries, including home building and mining.

Caterpillar warned it expects a lower adjusted operating profit margin in the current quarter, compared with the third.

The company’s sales have surged for three consecutive quarters as construction demand worldwide has been propped up by an unprecedented level of public spending.

Rising oil and commodity prices have also boosted the company’s sales, with customers ordering more equipment to ramp up production.

Sales from Caterpillar’s construction industries business, its largest unit, rose 30%, while sales at its energy and transportation unit jumped 22%.

The company’s adjusted profit rose to $2.66 per share in the third quarter ended September 30, beating analysts’ estimates of $2.20, according to Refinitiv IBES data.

Total sales and revenue rose 25.4% to about $12.40 billion, compared with estimates of $12.48 billion.

Caterpillar’s shares, which were up premarket, were trading marginally higher before the bell. – Rappler.com