(Reuters) – Caterpillar Inc on Tuesday reported lower quarterly earnings as equipment sales fell across all of its three primary segments, reflecting a slow and uneven recovery in global economic activity from coronavirus lockdowns.
The heavy equipment maker reported a third-quarter profit of $1.22 per share, down 54% from a year ago. Analysts surveyed by Refinitiv had on average expected earnings of $1.16 per share.
Profit was shored up by lower than expected taxes in the quarter. Revenue was down an annual 23%.
The company, a bellwether for economic activity, has been suffering from business uncertainty caused by the U.S.-China trade standoff and the coronavirus pandemic, with sales of its yellow bulldozers, mining trucks and other equipment hit by customers delaying capital expenditures.
Chief Financial Officer Andrew Bonfield said while customers are still wary of making big equipment purchases, a fast economic recovery in China as well as an improvement in residential activity in North America are expected to lift retail sales in the current quarter.
China is a “bright spot in our revenues”, Bonfield told Reuters, adding the world’s second-largest economy led a 14% year-on-year increase in construction machine sales in Asia-Pacific in the latest quarter.
Yet overall equipment sales are expected to decline in the quarter through December from a year ago. The pace of decline, however, is expected to moderate.
Reflecting weak equipment demand, Caterpillar now expects dealer inventories to decline by $2.5 billion this year compared with a more than $2 billion fall estimated earlier.
Caterpillar’s shares were down 1.38% in pre-market trade. The company’s stock has gained about 23% since the last earnings report, outperforming the broader Dow Jones industrial average , on hopes that the worst is over for its business.
Reporting by Rajesh Kumar Singh; Editing by Kirsten Donovan and David Holmes