Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }
Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you make the most of staying home.
Visit the hub

A row of excavators are seen at the Caterpillar booth at the CONEXPO-CON/AGG convention in Las Vegas on March 9, 2017.

David Becker/Reuters

Caterpillar Inc on Friday predicted no improvement in equipment sales, an outlook that sent its shares down after second-quarter earnings sank during a crippling recession sparked by the coronavirus pandemic, which made customers wary of big purchases.

The heavy equipment maker, a bellwether for economic activity, reported a 23 per cent drop in retail sales in the second quarter and predicted a similar decline in the quarter through September. Caterpillar’s outlook was bleaker than other industrial companies that have predicted the lifting of pandemic shutdowns will improve sales and its shares were last down 4.1 per cent at $131.12.

Profits in the current quarter are not forecast to improve from the last three months.

Story continues below advertisement

Stephen Volkmann, equity analyst with Jefferies, said Caterpillar’s outlook was an “outlier.”

“Either they are being a little bit conservative or they have some visibility,” he said.

The manufacturer said global economic uncertainty would continue to weigh on its results. It declined to reinstate full-year earnings guidance, withdrawn in late March. Share repurchases will also remain suspended this year.

Caterpillar’s earnings came a day after the U.S. economy reported its deepest contraction since the Great Depression.

The world’s largest economy shrank at a 32.9 per cent annualized rate last quarter with a 37.7 per cent plunge in spending on equipment, and a resurgence in new coronavirus cases has dimmed the outlook for the current quarter.

The international outlook also remained grim, with the International Monetary Fund predicting deeper contraction in global output this year.

Reflecting weak equipment demand, Caterpillar raised its estimates for reduction in dealer inventories to more than $2 billion this year from $1.5 billion estimated earlier.

Story continues below advertisement

“It’s a very fluid dynamic situation,” Chief Executive Officer Jim Umpleby said on an earnings call.

In response, it has cut production and is keeping a lid on costs. It is prioritizing investment in services business, which is expected to hold up better than equipment revenue in the downturn.

Revenue in the latest quarter was down an annual 31 per cent with a double-digit decline in equipment sales across all regions. Cost cuts cushioned the hit on profit, which came in at 84 cents per share, down 70 per cent year-on-year.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies