By Austen Hufford 

Slower construction of everything from cruise ships to pipelines during the coronavirus pandemic is weighing on demand for Caterpillar Inc.'s heavy machinery.

Caterpillar said Tuesday that machinery sales fell 23% in its third quarter as customers held off on big purchases. Revenue fell in Caterpillar's three global segments, declining 23% in construction, 21% in mining and 24% in its energy and transportation business.

"Those are very big machines, very expensive, and people are deferring [purchases] until such time as they have clarity," Andrew Bonfield, Caterpillar's financial chief, said in an interview.

Caterpillar's shares fell 1.4% to $161 in pre-market trading.

A sustained rise in coronavirus cases in the U.S. and around the world has sparked fears that such purchases will be on hold for some time.

Still, Caterpillar said there were some positive signs in the markets for its machinery, too. It expects industry-wide construction demand in China to increase for the year as a whole, despite a massive drop at the start of 2020 as the country first worked to contain the virus. In the U.S., home builders have increased construction rates in recent months.

"Residential construction is a bright spot. That's something we expect to continue," Mr. Bonfield said. "There are signs of life out there."

Caterpillar's weak performance of late stands in contrast to more consumer-focused manufacturers, who have struggled to keep up with stuck-at-home customers buying new cars and appliances.

Caterpillar said it was well-positioned to weather the crisis, with $9.3 billion in cash and $14 billion of available liquidity at the end of its third quarter.

The company saw an uptick in late payments from customers, with the past-dues rate increasing to 3.8% from 3.2% in the same quarter a year before. Still, the company said its customers remained in good financial health. While some went on a revised payment schedule during the heights of the lockdowns earlier this year, about 90% are now back to paying on a normal schedule, Caterpillar said.

In all, revenue fell 23% to $9.88 billion, from $12.76 billion in the same quarter a year before. Profit declined 55% to $668 million.

Write to Austen Hufford at austen.hufford@wsj.com

 

(END) Dow Jones Newswires

October 27, 2020 07:57 ET (11:57 GMT)

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