Caterpillar's Sales Fall as Coronavirus Weighs on Industry
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
"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
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
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
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
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
Write to Austen Hufford at email@example.com
(END) Dow Jones Newswires
October 27, 2020 07:57 ET (11:57 GMT)
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