If you own Caterpillar stock, three words, GOOD... FOR... YOU.
Industry analysts say high demand and unexpected increases in dealer restocking led to a 14% increase in sales and revenue in the first quarter of 2022 for heavy construction machine giant
The company announced sales and revenue of $13.6 billion for Q1 2022 compared to $11.9 billion in the same period of 2021. It marked the fifth consecutive quarter of increased sales.
The sales increase was unexpected, about double what was forecasted. Cat anticipated and about $600 million more than in Q1 of 2021. Dealer inventories had reportedly remained relatively flat in 2021 after a $2.9 billion decline in 2020.
“About half of that $600 million increase year on year came from resource industries due to the timing of shipments from dealers to their customers, which can be lumpy,” said Andrew Bonfield, Caterpillar chief financial officer. “These units are backed by firm customer orders who were not recognized in our reported retail sales for the quarter.” He said this is due in part to variations in onsite assembly times. The CFO said the remaining half of the field inventory increase was mainly due to timing in shipments in the construction industry late in the quarter.
“We anticipate the dealers will start to sell down the inventories in the second quarter following their normal seasonal pattern and strong sales to users,” Bonfield said.
Cat’s total backlog increased by $3.4 billion as the company experienced continued strong demand and supply chain challenges.
Caterpillar officials said the environment continues to be challenging due to supply chain issues and more COVID-19 shutdowns.
Construction sales
Within construction industries specifically Cat’s chief financial officer, Andrew Bonfield, said sales increased 12% in Q1 to $6.1 billion, primarily driven by federal price realization and strong sales volumes.
According to the report, the North America region had the highest sales growth and sales dollars with a 28% increase as non-residential demand improved, and residential construction remained strong.
The first-quarter report indicates sales in Latin America increased by 60%. Analysts caution, however, continued growth could be impacted by inflation and interest rate policies.
