(Reuters) -Caterpillar beat Wall Street estimates for second-quarter profit on Tuesday, as higher prices on its larger excavators and other construction equipment countered moderating demand in North America.
Shares of the company rose 5% in premarket trade, set to add to the about 7% gains so far this year.
Caterpillar has reaped the benefits from President Joe Biden’s 2021 infrastructure law, a $1 trillion enactment aimed at upgrading roads, bridges and other transport infrastructure.
Higher prices on its equipment have shielded the company’s profits against rising manufacturing costs.
Caterpillar, which makes machinery for the construction, mining and oil and gas industries, reported a favorable price realization of $578 million in the second quarter.
Overall sales in North America were up 1%, while sales in its construction equipment business, its largest, were flat in the region.
The decrease in sales volume was mainly driven by the impact from changes in dealer inventories, the company said. Dealer inventory decreased during the second quarter of 2024, compared with an increase during the same period a year earlier.
After a strong 2023 when supply chain concerns and soaring demand prompted dealers to bulk up on heavy equipment, U.S. machinery makers are now seeing a moderation in product stocking at dealers.
Meanwhile, second-quarter sales in Asia-Pacific region declined 9%, while they fell 16% in Europe, Africa and Middle East.
China’s troubled real estate market has pressured infrastructure spending in the country, resulting in a decline in Caterpillar’s sales for the past several quarters.
Economic uncertainty in Europe has also pressured demand.
Caterpillar reported an adjusted profit per-share profit of $5.99 in the second quarter, compared with analysts’ average estimates of $5.54
The company said sales and revenue for the quarter through June fell to $16.7 billion from $17.3 billion a year earlier, in line with Wall Street expectations.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Sriraj Kalluvila)
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