Higher costs drag Caterpillar profits lower
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Caterpillar reported a drop in profits Tuesday as higher costs and the drag from the strong dollar offset the lift from buoyant demand in industrial markets.
This manufacturer of machine equipment for the construction, resource and energy sectors saw continued healthy demand across its businesses.
But executives cited increased materials costs amid lingering supply chain problems as a drag, while also pointing to a hit from higher freight costs.
Net profits for the fourth quarter came in at $1.5 billion, down 31.4 percent from the year-ago period, while revenues rose 20.3 percent to $16.6 billion.
Company officials described broad progress on supply chain shortfalls, but with some areas still problematic.
"All it takes is one component to prevent you from shipping an engineering machine," Chief Executive Jim Umpleby said on a conference call with analysts.
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"It's very different product by product."
The said it company expects cost pressures to moderate throughout the year. Caterpillar is looking for opportunities to pass on higher costs to consumers, while weighing what's feasible.
"Certainly we take into account the increases from our suppliers in cost," Umpleby said. "We also pay very close attention to the competitive market ... we're managing the balance."
Shares fell 3.3 percent to $252.76 in afternoon trading.