Analyst Note| Dawit Woldemariam |
Caterpillar reported solid fourth-quarter results to close out 2022. The company’s machinery sales grew 21% year on year to $15.8 billion, thanks to stronger pricing and increased sales volume. Retail sales (to end users) of machines were up 4% year on year globally, with North America (up 13% year on year) being the biggest contributor to growth in the quarter. Notably, retail was up sequentially compared with the third quarter of 2022, showing Caterpillar’s increased ability to meet the demand from end users. That said, we’re not expecting much uplift from the dealer channel this year, as funding for infrastructure has still not flowed through to U.S. states. In the quarter, Caterpillar noted that dealer inventories increased $700 million sequentially compared with the third quarter. If we compare this to the same period a year ago, we see a $800 million favorable impact on total sales. We'd like to see this number cross over a billion dollars in the medium term.