Caterpillar defies concerns for construction slowdown with better-than-expected profits

Heavy machinery giant reported adjusted second-quarter earnings and revenue that beat analysts' expectations as demand surged from the construction, mining and energy sectors

The Texas-based company is one of the world’s biggest producers of heavy machinery.

Caterpillar shook off concerns of a global slowdown in economic activity, posting profit that exceeded analysts' expectations amid resilient demand for the company’s iconic yellow machinery across all its major business segments.

The Texas-based company is one of the world’s biggest producers of heavy machinery, with its yellow bulldozers, excavators and trucks dotting construction sites, mines and oil fields across the globe.

The bellwether for the global economy reported adjusted second-quarter earnings and revenue that beat analysts' expectations as demand surged from the construction, mining and energy sectors. 

The bullish results come as economists worry economic growth is slowing from the Americas to Europe and Asia, exacerbated by rising inflation and surging interest rates. 

Caterpillar’s adjusted profit of $5.55 a share topped the $4.54 average estimate of analysts polled by Bloomberg, helped by successful price hikes to customers of its machinery, along with surging sales.

“Our results reflect continued healthy demand as we achieved double-digit top-line growth,” chief executive Jim Umpleby said in the earnings statement.

Still, Caterpillar said it expected lower revenue in the third quarter and will incur restructuring costs of about $700m (€640m) for the year.

Rising freight and material costs, coupled with global supply chain troubles, have been large hurdles for the producer since the beginning of the pandemic in 2020, eating into profit margins. 

The company has repeatedly raised prices of its equipment to offset such pressures, with success. The company’s shares have risen more than 10% this year as construction projects, boosted by US government spending, have held up. 

However, the latest economic surveys in Europe may cause some concern. 

• Bloomberg