(Reuters) – Caterpillar reported a fall in third-quarter adjusted profit on Wednesday as higher borrowing costs and sticky inflation led to a slowdown in machinery demand, forcing the company’s dealers to moderate product restocking.
The company’s shares fell 3.5% before the bell.
Caterpillar’s adjusted per-share profit for the third quarter decreased to $5.17 from $5.52 a year earlier.
The company has reaped benefits from U.S. President Joe Biden’s 2021 infrastructure law, a $1 trillion enactment aimed at upgrading roads, bridges and other transport infrastructure.
However, the initial boom in demand from government infrastructure projects has slowed down.
The recent interest rate cuts stand to benefit companies such as Caterpillar, with higher infrastructure investments expected to boost demand for its construction machinery.
However, concerns about persistent inflation and declining farm incomes have resulted in U.S. machinery makers moderating product stocking as dealers try to cut inventory levels, while rising manufacturing costs have also dented profits.
Caterpillar’s total sales for the quarter fell to $16.11 billion from $16.81 billion a year earlier.
(Reporting by Utkarsh Shetti in Bengaluru; Editing by Shounak Dasgupta)
