Caterpillar reported weaker sales of construction equipment in all regions except North America for the first quarter of 2024.
Across all its segments, the equipment manufacturer reported total sales and revenue of $15.8 billion in Q1 of 2024, which was flat when compared year-over-year to Q1 of 2023.
The slim margin of difference was attributed to a slightly lower sales volume, offset by favorable price realization, including a geographic mix that was better than anticipated.
Dealers restocked in 2023, and by the fourth quarter, their inventories remained high. Caterpillar is waving the caution flag that as supply chain issues level out, the increased demand for machinery may be declining.
Caterpillar
Changes in dealer inventory are anticipated to act as a headwind to construction industry sales for the remainder of 2024.
Overall, Caterpillar saw sales and revenue percentages decrease in two of its three primary global segments construction industries, resource industries, and energy and transportation.
“Our results reflect the continuation of healthy demand for our products and services across most of our end markets,” Umpleby said. "We remain focused on executing our strategy and continue to invest for long-term profitable growth."
Focusing on construction industries, sales to users were down 5% in Q1 2024 to $6.4 billion. The decrease was primarily due to a lower sales volume of $464 million, partially offset by a favorable price realization of $199 million.
According to Caterpillar, the decrease in sales volume was mainly driven by lower sales, due primarily to economic conditions in Europe that are impacting residential construction.
In addition, the lower sales volumes were said to be mainly driven by the impact of changes in dealer inventories. Dealer inventories increased more during Q1 2023 than Q1 2024.
Combined, sales in the EAME (Europe, Middle East, and Africa), region dropped by 25%.
Caterpillar also reported a 14% decline in the Asia/Pacific region and a 1% drop in Latin America.
In the company’s largest geographic region for construction industries, North America, sales increased by 6% as demand remained healthy for both residential and nonresidential construction.
Umpleby noted that government-related infrastructure projects continue to benefit the nonresidential sector, particularly as funds from the $1 trillion Infrastructure Act continue to be utilized.
The construction industries segment's 2024 Q1 profit was $1.8 billion with a slight decrease from a year ago.
According to Caterpillar, the decrease was mainly due to lower sales volume and partially offset by favorable price realization and manufacturing costs.
“We continue to expect 2024 sales and revenues to be broadly similar to the record 2023 level,” Umpleby said.
Full-year 2024 segment expectations have been revised to reflect a slightly stronger top line in energy and transportation, offset by the softening in the European construction industry market.
The CEO said the current projection indicates that 2024 sales and revenues are expected to mirror 2023’s record levels. The company is continuing to strive for a 2026 target of $28 billion.
Caterpillar
