Caterpillar 1Q sales, profit decline from year ago
(Kitco News) - Caterpillar Inc. (NYSE: CAT) reported an annual decline in first-quarter earnings Tuesday with sales across all of its main business segments – including resources – weaker than a year ago.
Meanwhile, the company said its financial results for the year will be impacted by the global economic uncertainty brought about by the COVID-19 pandemic. Caterpillar withdrew its earnings guidance on March 26 and is not providing a fresh financial outlook for now.
The giant construction and mining equipment maker posted a quarterly profit of $1.98 per share, which was down 39% from $3.25 in the first quarter of 2019. After special items, the adjusted profit was $1.60 a share, down 46% from $2.94 in the year-ago period and below the consensus forecast that news reports put around $1.69 a share.
First-quarter revenue of $10.6 billion fell by 21% from $13.5 billion a year ago. The company blamed the decline on both lower end-user demand and changes in dealer inventories. Dealers increased machine and engine inventories by about $100 million during the first quarter of 2020, far less than the $1.3 billion during the first quarter of 2019.
Sales in the construction industry fell to $4.3 billion from $5.9 billion in the year-ago quarter, while sales in the resource industries fell to $2.1 billion from $2.8 billion. Energy and transportation sales fell to $4.3 billion from $5.2 billion.
“Mining equipment sales were lower due to weakness in certain commodities,” Caterpillar said. “In addition, demand decreased for equipment supporting non-residential construction and quarry and aggregates.”
The profit for the resources industries was $304 million, down from $576 million in the same quarter of 2019.
As of mid-April, approximately 75% of Caterpillar’s primary production facilities were continuing to operate as the world tries to halt the spread of COVID-19, the company said. Many governments have classified Caterpillar’s operations as essential to support infrastructure. Nevertheless, Caterpillar has suspended operations at some facilities due to supply issues, weak customer demand and government regulations, the company said.
Meanwhile, the company has implemented safeguards in its facilities and taken steps to reduce costs, including the suspension of 2020 base salary increases and short-term incentive compensation plans for many employees and all senior executives, Caterpillar said.
“We have taken decisive actions to enhance our strong financial position, while continuing to execute our strategy for profitable growth,” said Jim Umpleby, chairman and chief executive officer. “Caterpillar has faced and overcome many challenges in our 95-year history. Our goal is to emerge from the pandemic an even stronger company.”