2020 second quarter results
Sales and revenue fell 31% in the second quarter; earnings per share fell 70%
Balance sheet remains strong; cash holdings of $8.8 billion
Recently, Caterpillar announced its results for the second quarter of 2020: Sales and revenue for the second quarter of 2020 were US$10 billion, a 31% decrease from US$14.4 billion in the second quarter of 2019. The decline in sales caused by reduced end-user demand and the impact of changes in agent inventory are the reasons for the decline in sales and revenue this quarter. In the second quarter of 2020, agents reduced inventory of machinery and engines by approximately US$1.4 billion, while in the second quarter of 2019, agents increased their inventory by approximately US$500 million.
Earnings per share in the second quarter of 2020 were US$0.84, while earnings per share in the second quarter of 2019 were US$2.83. Earnings per share for the second quarter of 2020 include a pre-tax revaluation loss of US$122 million (US$0.19 per share) due to pension liquidation. Compared with the 15.3% operating profit margin in the same period last year, it will fall to 7.8% in the second quarter of 2020.
In the first half of 2020, corporate operating cash flow was US$2.5 billion. By the end of the second quarter, Caterpillar held US$8.8 billion in cash and US$18.5 billion in available liquidity sources. In July, CAT? (Carter) raised US$1.5 billion in three-year and 18-month medium-term bonds to supplement its liquidity.
Caterpillar Chairman and CEO An Bojun said:
In the process of implementing company strategy and serving customers, the Caterpillar global team always pays attention to safety. In the second quarter, our employees and agents are still committed to providing core products and services that meet global needs despite the huge challenges. I am proud of this.
Operating status
Caterpillar continues to implement safety measures in factories and offices to protect employees, including increasing the frequency of cleaning and disinfection in the workplace, maintaining social distancing, and other measures that meet the specific requirements and guidance of health authorities.
As of mid-July 2020, Caterpillar’s three major businesses continued to operate in almost all major production facilities around the world. This situation will be adjusted accordingly with the development of the future situation, such as the speed of economic recovery and the temporary suspension of work that may be caused by the new coronavirus pneumonia epidemic.
The company continues to take measures to reduce costs and prioritize expenditures to continue to invest in services and expanded product lines, which are key elements of the profitable growth strategy proposed in 2017.
Outlook
As the COVID-19 epidemic has brought continuous uncertainty to the global economy, Caterpillar's financial performance for the remaining quarters of 2020 will be affected. Therefore, Caterpillar has withdrawn its performance guidance on March 26, and temporarily does not provide its 2020 performance outlook.
An Bojun said: “Successful implementation of the corporate strategy puts Caterpillar in a good position to deal with challenges. We focus on employee safety and maintain a competitive and flexible cost structure. At the same time, the company continues to invest in services and expansion Product lines to better serve customers. We will adjust production according to changes in the situation and are ready to quickly respond to any positive or negative customer needs."
