Caterpillar reports big drop in profits amid murky outlook

Caterpillar reported a steep drop in 2nd quarter profits on Friday, July 31, amid weak demand from industrial clients and said its overall outlook remained clouded by the coronavirus.

The global industrial machinery manufacturer reported a big drop in quarterly earnings and said it had yet to see a pickup in demand for mining equipment despite higher copper prices.

The company, which withdrew its full-year projection in March at the height of coronavirus lockdowns, said there are still too many unknowns to reinstate a forecast.

"Our financial results for the remainder of 2020 will depend on the duration of the pandemic and its impact on global economic conditions," chief executive Jim Umpleby said on a conference call with analysts.

Revenues fell in all 3 of Caterpillar's divisions, which manufacture machines for the construction, energy, and mining industries.

Net income tumbled 71.7% to $458 million as revenues fell 30.7% to $10 billion.

Umpleby told analysts that based on current interactions with customers, sales trends in the 3rd quarter were on a similar track to those in the 2nd quarter.

"What we're saying is we're not expecting a further decline in sales to users," he said. "We don't expect things to get worse...and again, things could get better."

Umpleby said the company has yet to see a significant pickup in demand from mining companies, despite a recovery in copper prices amid higher demand in China.

"We continue to be positive on mining, medium and the long term," he said. "It's not surprising that in the short term, given what's happening with COVID, customers are being a bit cautious."

The company's share price fell 4.6% to $130.26 in mid-morning trading. ā€“