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Caterpillar Gains as Construction Boom Boosts Equipment Sales

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By Dhirendra Tripathi

Investing.com – Caterpillar (NYSE:CAT) stock traded nearly 2% higher in Thursday’s premarket as strong demand for its construction and mining equipment and higher commodity prices took the company’s third-quarter numbers past analysts’ expectations.

Lower inventories at dealers’ end also helped the company.

Booming economies spurred manufacturing, mining and construction activities the world over which translated into higher margins for the company. Operating margins thus expanded by 340 basis points to 13.4%. One basis point is one-hundredth of a percent.

The company grew its revenue across business segments in double digits on an overall basis and across geographies.

Sales from Caterpillar's construction industries business, its largest unit, rose 30% while sales at its energy & transportation unit jumped 22%.

Sales and profit at its financial services subsidiary Caterpillar Financial were robust too.

Revenue rose 6% to $634 million. Profit more than doubled to $101 million.

As markets improved, the financial unit managed to improve collections from its customers. It closed the September quarter with past dues at 2.4% compared to 3.8% at the end of the same period in 2020.

Caterpillar’s total third-quarter revenue rose more than 25% to $12.4 billion. Inflation in commodities, metals and non-metals, showed up in nearly 25% higher cost of products sold.

Adjusted profit per share was 75% higher at $2.66, boosted by foreign currency gains.

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