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(Reuters) -Caterpillar Inc on Thursday reported better-than-expected quarterly profit and revenue, powered by price hikes, while a surge in oil and commodity prices led to more orders for its equipment used in facilitating production and transport.
Shares of the company, however, slipped 2% in trading before the bell as it indicated pressure on its profit margins in the current quarter from surging costs.
Caterpillar (NYSE:CAT), a proxy for global economic activity, has benefited from a staggering rise in prices of raw materials and oil, as a pick up in drilling and excavating activities drives mining and oil industries to spend more on its machinery.
“Mining activity will continue to increase,” Caterpillar Chief Financial Officer Andrew Bonfield said in an interview.
Higher construction activity also powered Caterpillar’s first-quarter results, as it reported double-digit sales growth across all three of its segments.
Asia/Pacific equipment sales, however, fell as strict lockdowns in China, which usually accounts for 5% to 10% of company sales, hit its business in the country.
Total operating costs in the quarter through March rose 16.5% to $11.73 billion.
The company has managed to dodge the impact of supply-chain challenges and higher input costs, exacerbated by the ongoing war in Ukraine, by announcing two price hikes last year.
Caterpillar also said it continues to anticipate further price increases, which will help improve its margins in the second half of the year, compared with the first.
Its adjusted profit for the quarter was $2.88 per share, beating average analysts’ expectation of $2.60 per share.
Revenue for the quarter rose about 14% to $13.59 billion, beating expectations of about $13.4 billion.
