Caterpillar has announced second-quarter 2020 sales and revenues of $10.0 billion, a 31-percent decrease compared with $14.4 billion in the second quarter of 2019.
Sales had dropped 21 percent during the first quarter.
Lower demand, inventories
The second-quarter decline was due to lower sales volume driven by lower end-user demand and the impact from changes in dealer inventories. Dealers decreased machine and engine inventories about $1.4 billion during the second quarter of 2020, compared with an increase of about $500 million during the second quarter of 2019.
Second-quarter 2020 profit per share was $0.84, compared with $2.83 profit per share in the second quarter of 2019. Profit per share in the second quarter of 2020 included pre-tax remeasurement losses of $122 million, or $0.19 per share, resulting from the settlements of pension obligations.
Operating profit margin was 7.8 percent for the second quarter of 2020, compared with 15.3 percent for the second quarter of 2019.
For the first half of 2020, enterprise operating cash flow was $2.5 billion. Caterpillar ended the second quarter with $8.8 billion of enterprise cash and $18.5 billion of available liquidity sources. In July, Cat Financial issued $1.5 billion of new three-year and 18-month medium-term notes to supplement its liquidity position.
Covid-19 and Global Business Conditions
“I am proud of the global team’s continued focus on safety while executing our strategy and serving our customers,” said Caterpillar chairman and CEO Jim Umpleby. “In the second quarter, our employees and dealers remained dedicated to providing the essential products and services the world needs under very challenging conditions.”
Caterpillar continues to implement safeguards in its facilities to protect team members, including increased frequency of cleaning and disinfecting, social distancing practices, and other measures consistent with specific regulatory requirements and guidance from health authorities.
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. This continues to fluctuate as conditions warrant, including the pace of economic recovery and the potential for additional Covid-related temporary shutdowns.
The company has continued to take actions to reduce costs and prioritize its spending to provide for investment in services and expanded offerings, key elements of its strategy for profitable growth, which was introduced in 2017.
Caterpillar’s financial results for the remainder of 2020 will be impacted by continued global economic uncertainty due to the Covide-19 pandemic. As such, Caterpillar withdrew its earnings guidance on March 26 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,” said Umpleby. “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.”