Caterpillar Inc. posted second-quarter sales that beat analysts’ expectations, though the company saw a slowdown in China, a key market for construction equipment.
Revenue from products sold was $13.54 billion, below the $13.98 billion average estimate of 17 analysts polled by Bloomberg, the Deerfield, Illinois-based company said Tuesday in its quarterly report. Caterpillar, often viewed as an economic bellwether, said construction equipment sales fell in Asia Pacific, citing lower revenue to end users in China. The equipment maker also said “unfavorable manufacturing costs largely reflected higher material and freight costs.”
Caterpillar fell as much as 3.1% Tuesday in premarket trading in New York.
Caterpillar’s results come a week after government data revealed the US economy contracted for a second straight quarter, worrying investors that the nation could be heading into a recession. Shares of Caterpillar are down about 5.8% this year as the producer grapples wit headwinds from supply-chain troubles, surging power costs across Europe and Covid-related shutdowns in China.
Caterpillar has previously said that China represents about 5% to 10% of its total business sales.
Adding to the company’s trouble is surging inflation across the globe. Rising freight and material costs have trimmed profits for the producer of iconic yellow construction and mining machinery, Bloomberg Intelligence analysts said before the earnings. The company continues to have power to raise prices to offset those rising costs, BI said.
(By Joe Deaux)
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