Feb 5 (Reuters) - Caterpillar reported a higher quarterly profit on Monday, buoyed by strong demand for its excavators and other large construction equipment amid higher infrastructure spending and a rebound in the U.S. residential real estate market.
Shares for the Texas-based company were up 6.3% before the bell.
Expenditure on heavy machinery remains robust among commercial clients. Dealer inventories fell for the first time in four quarters in an encouraging sign that spending remains resilient helped by President Joe Biden's $1 trillion infrastructure law to upgrade roads, bridges and other transportation routes.
The manufacturer's profit margins have been aided by a $28.1 billion order backlog for construction equipment and demand from customers in oil and gas, power generation, rail and defense in the past year.
Despite drilling at North American oil rigs showing signs of weakening, the industrial powerhouse is still benefiting from higher purchase volumes for its haul trucks and other mid- to large-sized mining equipment.
Purchases of heavy machinery from construction and mining industries aided its full-year operating margin. Margins for the world's largest construction company in the energy and transportation segment rose 21% from the year prior.
Caterpillar's earnings have also been shielded by effective cost controls and price hikes to fend off inflationary pressures.
The company's fourth-quarter profit rose to $2.68 billion, or $5.28 per share, from $1.45 billion, or $2.79 per share, a year earlier.
Sales and revenue for the quarter ended Dec. 31 rose to $17.1 billion from $16.6 billion.
Reporting by Shivansh Tiwary in Bengaluru and Bianca Flowers in Chicago; editing by Sriraj Kalluvila and Jason Neely
Source: Reuters