CHICAGO (Reuters) - Caterpillar Inc on Tuesday reported lower quarterly earnings as equipment sales fell across its three primary segments, reflecting a slow and uneven global economic recovery following lockdowns to curb the spread of the new coronavirus.
The heavy equipment maker, however, said the pace of decline in sales of its yellow bulldozers, mining trucks and other equipment was moderating, helped by a fast economic recovery in China and improvement in residential activity in North America.
“I feel better today than I did a quarter ago,” Chief Executive Jim Umpleby told investors on an earnings call, adding the pandemic and its impact on the global economy would determine the strength of the recovery.
The company did not provide an updated earnings guidance due to COVID-19 uncertainties. However, it said the decline in machine sales would moderate further in the quarter through December.
Operating profit is also forecast to improve in the current quarter from a quarter ago. Share repurchases, however, will remain suspended this year.
Caterpillar’s shares were down 2.9% at $158.32 in morning trading. The stock has gained over 20% since the last earnings report, outperforming the broader Dow Jones Industrial Average, on hopes that the worst is over for its business.
The Illinois-based company, a bellwether for economic activity, has been suffering from business uncertainty caused by the U.S.-China trade standoff and the coronavirus pandemic, which has forced customers delay capital expenditure.
Chief Financial Officer Andrew Bonfield said while the demand for smaller machines has improved, customers were still hesitant to invest in heavy and more expensive equipment.
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.
Profit for the third quarter came in at $1.22 per share, down 54% from a year ago, but above Refinitiv’s average analyst estimate of $1.16 per share. Retail sales declined 20% in the latest quarter, compared with a 23% drop a quarter ago.
Reporting by Rajesh Kumar Singh; Editing by David Holmes and Bernadette Baum
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