Caterpillar reports 31% drop in Q2 sales
By Jenny Lescohier31 July 2020
Caterpillar has reported US$10 billion in second quarter 2020 sales and revenue, reflecting a 31% decrease from US$14.4 billion in the same quarter in 2019.
According to financial results released on 31 July, the decline was due to lower sales volume driven by lower end-user demand, the impact from changes in dealer inventories and Covid-19.
For Cat’s construction industries segment sales dropped from US$6.5 billion in the second quarter of 2019 to US$4.0 billion in the same quarter of 2020. This is a fall of 37%.
The Resource Industries segment, which includes mining equipment, saw sales fall from US$2.8 billion to US$1.8 billion in the second quarter.
Dealers decreased machine and engine inventories of approximately US$1.4 billion during the second quarter of 2020, compared with an increase of about US$500 million during the second quarter of 2019.
Operating profit for the second quarter was reported at US$784 million, down 65% from US$2.2 billion for same period in 2019.
While dramatic, there are also signs of recovery, with machine sales in Asia growing again, as well as a reduced decline in sales from other regions.
In Caterpillar’s ‘home’ market of the US, the government is now beginning to ease restrictions, which industry analysts say is a primary reason for the company’s stock gaining 34% since the middle of May.
Still, Caterpillar’s financial results for the remainder of 2020 will be impacted by continued global economic uncertainty due to the Covid-19 pandemic. As such, the company withdrew its earnings guidance on 26 March and is not providing a financial outlook for 2020 at this time.
“We are well positioned for these challenging times because of the successful execution of our strategy,” Jim Umpleby, Caterpillar chairman and CEO, said. “We are focused on employee safety and maintaining a competitive and flexible cost structure while continuing to invest in services and expanded offerings to better serve our customers. We will adjust production as conditions warrant and are prepared to respond quickly to any positive or negative changes in customer demand.”
As of mid-July 2020, globally and across Caterpillar’s three primary segments, nearly all of the company’s primary production facilities continued to operate.