Caterpillar reports big drop in profits amid murky outlook

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 three of Caterpillar's divisions, which manufacture machines for the construction, energy and mining industries.

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

Umpleby told analysts that based on current interactions with customers, sales trends in the third quarter were on a similar track to those in the second 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 percent to $130.26 in mid-morning trading.