All trends remain Stable. The rating confirmations are based on CAT's solid operating performance in 2021 as a result of a strong recovery in end-user demand. The Stable trends reflect DBRS Morningstar's expectation that operating results and credit metrics will remain supportive of the current rating category in the near to medium term.
The ratings continue to be supported by CAT's robust business profile as a global leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The Company's strong technological capabilities and superior product quality allow it to maintain a leading market position and strong brand recognition. Furthermore, the Company's captive finance subsidiary and large global network of independent dealers provide intensive geographic coverage and strong customer relationships.
CAT's recent operating performance generally unfolded in line with DBRS Morningstar's expectations. Recovery in end-user demand was very strong throughout 2021, driven by rising commodity prices, resumed capital spending by customers, and increasing construction activities in most regions except some softening in
DBRS Morningstar expects CAT's net sales to grow by 10%-12% in 2022, driven by strong demand signals from all primary segments and anticipated price realization. The backlog at the end of 2021 increased to
DBRS Morningstar notes that CAT faces some near-term headwinds, including ongoing supply chain shortages and delays and surging inflation. The global supply chain issues are expected to persist throughout 2022 because of the
DBRS Morningstar expects CAT's ratings to remain stable in the short to medium term because of its strong credit metrics being well commensurate with the current ratings. Conversely, although highly unlikely, should CAT's credit profile deteriorate sharply because of a decrease in revenue and/or margin contraction, a negative rating action could result.
ESG CONSIDERATIONS
There were no environmental, social, or governance factors that had a significant or relevant effect on the credit analysis.
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.
Notes:
All figures are in
The principal methodologies are Rating Companies in the Industrial Products Industry (
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrsmorningstar.com.
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.
For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.
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Ratings
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
E =
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
16-May-22 Issuer Rating Confirmed A Stb CA
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
E =
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
16-May-22 Medium-Term Notes Confirmed A Stb CA
16-May-22 Commercial Paper Confirmed R-1 (low) Stb CA
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
E =
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
16-May-22 Issuer Rating Confirmed A Stb CA
16-May-22 Senior Unsecured Debt Confirmed A Stb CA
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