Caterpillar Expects Reduced Demand to Persist
31 Juillet 2020 - 2:23PM
Dow Jones News
By Austen Hufford
Caterpillar Inc. said its revenue in the U.S. dropped more than
40% in the second quarter, but the machinery giant sought to
reassure investors with the pile of cash it has amassed to ride out
the coronavirus crisis.
The maker of equipment for mining companies and builders around
the world said Friday that revenue fell by at least 10% globally in
its latest quarter in each of its three segments -- selling
machinery to customers in construction, resources and energy and
transportation industries.
"With the uncertainty out there with the economic environment,
they are delaying making capital expenditures," Andrew Bonfield,
Caterpillar's financial chief, said in an interview.
Caterpillar also said it was well-positioned to weather the
crisis, with $8.8 billion of cash and $18.5 billion of available
liquidity at the end of its second quarter. The company's shares
rose 1.7% in premarket trading to $138.99.
Caterpillar, which makes sales through a network of independent
dealers, said dealers cut their inventories by $1.5 billion, as
they prepared for lower demand, compared with a $500 million
increase in the same quarter last year.
Caterpillar said demand from final customers fell around 22% in
the quarter, and the company expects a similar decline for its
third quarter. Machinery sales to dealers dropped by nearly
one-third globally.
While the company said some road-building customers reported
faster construction times because of much lower road traffic,
demand from them was more than offset by other customers delaying
projects. The company also saw lower parts sales in some of its
divisions, an indicator that customers were using their equipment
less.
The company said it cut costs, including by using less
temporary, contract labor at some of its facilities. The company's
financial arm had set aside $515 million for credit losses,
compared with $457 million at the end of the first quarter. The
company said more customers were past-due on their payments, even
as it worked with them to extend terms and offer temporary
relief.
"Customers were in pretty good financial health when they came
into the crisis," Mr. Bonfield said.
In all, revenue declined 31%, falling to $10 billion, from $14.4
billion in the same quarter a year before. Profit declined 72% to
$458 million, dropping to 84 cents a share from $2.83 in the same
quarter a year before.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
July 31, 2020 08:08 ET (12:08 GMT)
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