Caterpillar Sees Improvement in Still-Depressed Sales

Caterpillar Inc. announced its earnings October 27 and declared $9.88 billion of sales and revenue in the third quarter of 2020, a 23% decrease in sales compared to the same quarter of 2019. The margin is an improvement on its second-quarter year-over-year results, which saw sales drop 30% from 2019.

Profit per share of the heavy-equipment manufacturer was $1.22, $1.44 or 54% less than it was a year ago. The company’s operating profit margin was 10.0%.

The company’s cash flow for the first nine months of 2020 was $4.3 billion, and Caterpillar ended the quarter with $9.3 in enterprise cash and at least $14 billion of available liquidity sources.

Caterpillar attributed the decline in revenue to depressed demand for equipment and services caused by the COVID-19 outbreak. Sales fell in each of Caterpillar’s three segments—construction, resources, energy and transportation—and in all geographic areas, even as year-over-year numbers improved relative to the company’s second quarter, which may have caught the worst of the COVID impact.

Sales of construction equipment in the third quarter were 23% worse in the third quarter of 2020 than they were in Q3 2019. Sales were 21% worse than last year for sales of mining and resource equipment during the third quarter and 24% worse for energy and transportation equipment.

But all of those figures improved compared to the yearly deficit in Caterpillar’s second quarter, when sales of construction equipment were 37% worse than in 2019, mining and resource sales were down 35%, and energy and transportation equipment sales were down 24%.

Geographically, Caterpillar’s year-over-year sales figures also improved in each region of operation. North American sales were 31% lower and Latin American sales were 37% lower during the third quarter of 2020 as compared to the previous year, but that gap was 42% for both regions last quarter. Revenue from machinery, energy, and transportation products was 14% lower in Europe, Africa, and the Middle East than last year, down slightly from a 17% deficit compared to last quarter.

Caterpillar performed best, relative to pre-pandemic sales, in the Asia/Pacific region, where 2020 sales were only 8% lower than they are this year. That again improved on figures from the second quarter of the year when the gap was 17%.

The company did not provide a guidance for what the next quarter might look like.

In a statement, CEO Jim Umpleby said the earnings “largely aligned” with expectations. “I’m proud of our global team’s performance as we continue to safely navigate the pandemic while remaining firmly committed to serving our customers,” he said, and added he was “encouraged by positive signs” in unspecified industries and geographies.

“We’re executing our strategy and are ready to respond quickly to changing market conditions,” said Umpleby. 

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