By Dhirendra Tripathi
Investing.com – Caterpillar stock (NYSE:CAT) was 2.3% down in premarket trading Friday as the company warned of a hit to its margins in the first quarter, even as sales surge.
The statement comes after the company battled labor shortages, material cost inflation and supply chain disruptions in the December quarter. Higher costs, including for freight, cost Caterpillar 1.4 percentage points in operating profit margin, which fell to 11.4%.
The company expects the margins to improve as the year progresses and supply chains ease.
According to Reuters, Caterpillar expects to raise prices again this year, after two such increases already last year.
Sales in the fourth quarter rose 23% to nearly $14 billion, riding on higher volumes and price realization in both North and Latin America.
Demand was lower in Asia Pacific, mainly because of China, where the debt crisis hitting real estate developers is causing fixed asset investment - and consequently the demand for heavy machinery - to slow sharply.
Profit was $2.12 billion in the quarter, and at $2.69 per share on an adjusted basis, beat estimates.