Caterpillar takes nearly $3 billion hit year-over-year in Q3
While its leadership is seeing positives in the future, Caterpillar is still fighting the effects of global pandemic challenges, as shown by its third-quarter financials. The company saw a large decrease in sales and revenue over the previous year.
Cat announced that its third-quarter 2020 sales and revenue were $9.9 billion, a decline of 23 percent compared to the $12.8 billion it saw in the third quarter of 2019. The company said that drop was due to lower sales volume, driven by lower end-user demand for equipment and services.
"I'm proud of our global team's performance as we continue to safely navigate the pandemic while remaining firmly committed to serving our customers," said Caterpillar Chairman and CEO Jim Umpleby. "Our third-quarter results largely aligned with our expectations, and we're encouraged by positive signs in certain industries and geographies. We're executing our strategy and are ready to respond quickly to changing market conditions."
Profit per share in the third quarter was $1.22, compared to $2.66 in the same period of 2019. That figure included a pre-tax remeasurement loss of $77 million, or $0.12 per share, resulting from the settlements of pension obligations. Profit per share benefited from lower than expected taxes in the quarter.
Operating profit margin was 10.0 percent for the third quarter of 2020, compared with 15.8 percent for the third quarter of 2019. Enterprise operating cash flow for the nine months through September 30, 2020 was $4.3 billion. At the end of the third quarter, Caterpillar reported having $9.3 billion of enterprise cash, and more than $14 billion of available liquidity sources.
Meanwhile, Cat Financial Services reported Q3 revenues of $598 million, a decrease of $150 million, or 20 percent, compared with the third quarter of 2019. Third-quarter 2020 profit was $48 million, an $81 million, or 63 percent, decrease from the third quarter of 2019.
The decrease in revenues was primarily due to a $76 million unfavorable impact from lower average financing rates and a $40 million unfavorable impact from lower average earning assets.
Third-quarter 2020 profit before income taxes was $96 million, an $88 million, or 48%, decrease from the third quarter of 2019. The decrease was primarily due to a $50 million increase in provision for credit losses, a $29 million decrease in net yield on average earning assets and an $18 million unfavorable impact from lower average earning assets.