Caterpillar Reports 21% Q1 Drop

By Mike Osenga29 April 2020

In line with what many in the industry are reporting for a first quarter that has been truly unique and one that essentially no one saw coming, Caterpillar Inc. announced first-quarter 2020 sales and revenues of $10.6 billion, a 21% decrease compared with $13.5 billion in the first quarter of 2019.

Cat said the decline was due to lower sales volume driven by lower end-user demand and lower dealer buying. Dealers increased machine and engine inventories about $100 million during the first quarter of 2020, compared with about $1.3 billion during the first quarter of 2019.

The Deerfield, Ill.-headquartered manufacturer said first-quarter 2020 profit per share was $1.98, compared with $3.25 profit per share in the first quarter of 2019. During the first quarter of 2020, operating cash flow was $1.130 billion.

As far as the impacts of COVID-19, the company said many governments classified Caterpillar’s operations as an essential activity for support of critical infrastructure. Caterpillar has suspended operations temporarily at certain facilities during the last several weeks due to supply chain issues, weak customer demand or government regulations.

As of mid-April 2020, globally and across its three primary segments, approximately 75% of the company’s primary production facilities continue to operate. Some facilities that were temporarily closed have reopened.

The company said it has taken actions to reduce costs, including reducing discretionary expenses and suspending 2020 base salary increases and short-term incentive compensation plans for many employees and all senior executives. Caterpillar said it is prioritizing spending to allow continued investment in services and expanded offerings.

Caterpillar’s financial results for the remainder of 2020 will be impacted by continued global economic uncertainty due to the COVID-19 pandemic. As has become common for many publicly traded companies, Caterpillar withdrew its earnings guidance on March 26 and is not providing a financial outlook for 2020 at this time.

For Caterpillar’s three major operating segments, the Energy & Transportation group (which includes its engine operations) fared better than other Cat segments with a 17% drop in sales and revenue versus Q1 of 2019. Energy & Transportation had sales and revenue of $4.349 billion in 2020 versus $5.210 for the same period in 2019.

Construction Industries was down 27% to $4.306 billion vs. $5.873.

Resource Industries was down 24% from $2.752 billion to $2.084.

Geographically, Asia/Pacific was down 27%, North America was down 24%, Latin America was down 21% and EAME showed a 7% drop, helped by a 2% increase in Energy & Transportation sales and revenues in the region.

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