By Bianca Flowers and Aishwarya Nair
(Reuters) – Heavy machinery maker Caterpillar Inc topped Wall Street expectations with a 31% rise in first quarter profit on Thursday but a flat order backlog left analysts thinking that demand may have peaked.
Profit in the first quarter was lifted by a boost in U.S. infrastructure spending which kept order books full and softened the hit from higher costs.
But the shares were down slightly in premarket trading after the company noted an increase in dealer inventories. A flat order backlog compared to the previous quarters may be an indicator of a slowdown in equipment purchases, analysts said.
“At a high level these are really strong results — the initial stock reaction reflects some degree of ‘is this the best and have we peaked out,” said Kristen Owen, executive director at Oppenheimer & Co Inc.
The company reported adjusted profit of $4.91 per share, beating Refinitiv analysts consensus of $3.78 per share.
The Biden administration’s infrastructure legislation encouraged spending in the construction sector, spurring demand for the machinery maker’s excavators, bulldozers and trucks.
Caterpillar’s construction division recorded a 10% rise in total sales on the back of solid demand in North America which increased 33% year-over-year.
Its energy customers, grappling with aging machines and tight production capacity, also placed more orders for parts and engines as drilling activities surged with higher oil and gas prices.
In the last eight quarters, CAT has met or beaten revenue estimates five times. The Texas-based company’s resources and mining division profit rose 112% while sales in the company’s energy and transportation segment saw a 24% increase year-over-year.
Cost control measures that led the company to raise prices across its machinery lines over the past two years have buoyed top-line growth, helping Caterpillar navigate higher material and freight costs amid ongoing supply challenges.
Caterpillar’s revenue for the quarter through March 31 rose to $15.9 billion from $13.6 billion a year ago.
(Reporting by Aishwarya Nair in Bengaluru Bianca Flowers in Chicago; Editing by Devika Syamnath, Kirsten Donovan, Elaine Hardcastle)