Caterpillar Says China Demand to Drop on a Construction Slowdown
- CFO says pullback to be mostly driven by construction market
- Profits shrinking due to supply chain, despite demand growth
A Caterpillar 938K wheel loader sits in the snow at a supply company in Lexington, Kentucky.
Photographer: Luke Sharrett/Bloomberg
Caterpillar Inc. is signaling to the market that demand from China is going to decline in 2022 and supply chain snarls will persist, despite machinery needs across most of the globe improving.
The company said sales of construction equipment in China slumped during the fourth quarter as end-user demand waned, and that profit margins are shrinking as costs related to supply-chain issues continue to add up. Chief Financial Officer Andrew Bonfield said the China drop will be driven mostly by a slowdown in the nation’s construction market, which could see benchmark sales of 10-ton-and-above excavators tumble 10% to 50%.