CAT Caterpillar Inc

By Austen Hufford 

Caterpillar Inc. said its revenue in the U.S. dropped more than 40% in the second quarter, but the machinery giant sought to reassure investors with the pile of cash it has amassed to ride out the coronavirus crisis.

The maker of equipment for mining companies and builders around the world said Friday that revenue fell by at least 10% globally in its latest quarter in each of its three segments -- selling machinery to customers in construction, resources and energy and transportation industries.

"With the uncertainty out there with the economic environment, they are delaying making capital expenditures," Andrew Bonfield, Caterpillar's financial chief, said in an interview.

Caterpillar also said it was well-positioned to weather the crisis, with $8.8 billion of cash and $18.5 billion of available liquidity at the end of its second quarter. The company's shares rose 1.7% in premarket trading to $138.99.

Caterpillar, which makes sales through a network of independent dealers, said dealers cut their inventories by $1.5 billion, as they prepared for lower demand, compared with a $500 million increase in the same quarter last year.

Caterpillar said demand from final customers fell around 22% in the quarter, and the company expects a similar decline for its third quarter. Machinery sales to dealers dropped by nearly one-third globally.

While the company said some road-building customers reported faster construction times because of much lower road traffic, demand from them was more than offset by other customers delaying projects. The company also saw lower parts sales in some of its divisions, an indicator that customers were using their equipment less.

The company said it cut costs, including by using less temporary, contract labor at some of its facilities. The company's financial arm had set aside $515 million for credit losses, compared with $457 million at the end of the first quarter. The company said more customers were past-due on their payments, even as it worked with them to extend terms and offer temporary relief.

"Customers were in pretty good financial health when they came into the crisis," Mr. Bonfield said.

In all, revenue declined 31%, falling to $10 billion, from $14.4 billion in the same quarter a year before. Profit declined 72% to $458 million, dropping to 84 cents a share from $2.83 in the same quarter a year before.

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

(END) Dow Jones Newswires

July 31, 2020 08:08 ET (12:08 GMT)

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