Large manufacturers report lower sales to companies ranging from cruise ship builders to medical practices as the The coronavirus pandemic continues to weigh on economic activity around the world.
said on Tuesday that revenues had fallen by at least a fifth in the last quarter in each of its three global segments: construction, mining and energy and transportation. 3M Co.
said sales were down in about half of its lines of business from a year earlier, and demand for its products for elective medical and dental procedures was not likely to pick up again. next year.
Their results show that demand from business customers is on volatile ground as the pandemic continues to disrupt work routines and commerce.
“This reflects the challenges still with Covid,” 3M chief executive Mike Roman said in an interview of the demand for its medical and dental products. “It won’t be a perfectly straight line.”
3M shares fell 1.8% to $ 163.15 on Tuesday, and Caterpillar fell 3.7% to $ 157.20.
At the same time, demand for 3M products such as N95 masks and household cleaning products is booming, and sales of the St. Paul, Minnesota-based company have increased 4.5%. to reach $ 8.35 billion for the third quarter. Some consumer-oriented manufacturers like Whirlpool Corp.
have struggled to meet the demand of consumers who are renovating their homes and purchasing new vehicles.
“We see both sides of the pandemic,” Mr. Roman said.
Covid-19 cases are on the rise again this month in the United States and other parts of the world. This results in further restrictions on restaurants and other businesses. Industrial activity, for its part, remains sluggish. Production at U.S. factories fell in September after three months of gains, the Federal Reserve said earlier this month.
Some manufacturers have said they have been hit by the whip this year by a drop in demand followed by a surge. Cummins Engine Manufacturer Inc.
said on Tuesday it recorded its biggest sales increase for the last quarter compared to the previous three months.
“Even with the dramatic increase, however, sales remained below last year’s levels,” Cummins chief executive Tom Linebarger told analysts Tuesday.
Coating manufacturer PPG Industries Inc.
said last week that sales of its coatings used on aircraft fell 35% in its most recent quarter as major aircraft manufacturers cut production and airlines flew less.
Caterpillar said the slower construction of everything from cruise ships to pipelines during the coronavirus pandemic is straining demand for its heavy machinery.
“These are very big machines, very expensive, and people are reporting [purchases] until they’re clear, ”said Andrew Bonfield, Caterpillar CFO, in an interview.
The oil and gas market has been particularly weak for Caterpillar. Its sales to customers in this industry fell 41% as lower energy prices halted development of new oil and gas fields. Caterpillar continues to view energy as a long-term opportunity. During the quarter, he announced that he would acquire the oil and gas business of Weir Group PLC for $ 405 million.
Caterpillar said there were positive signs in the markets for its machines. He expects industry-wide construction demand in China to grow for the full year, despite a massive drop in early 2020 as the country initially strived to contain the virus. In the United States, home builders have increased construction rates in recent months.
“Residential construction is a bright spot. This is something that we hope to continue, ”said Mr. Bonfield.
Caterpillar said it was well positioned to weather the crisis, with $ 9.3 billion in cash and $ 14 billion in cash on hand at the end of its third quarter.
The company said it expects sales to improve in the fourth quarter compared to the third. The company’s backlog increased $ 500 million from the second quarter, but remained $ 1.2 billion lower than the quarter last year.
“While the situation remains fluid, overall we are cautiously optimistic,” chief executive Jim Umpleby told analysts.
Caterpillar saw an increase in late payments from customers, with the arrears rate rising to 3.8% from 3.2% in the same quarter a year earlier. Still, the company said its customers remain in good financial health. While some adopted a revised payment schedule at the height of the lockdowns earlier this year, about 90% are now back to paying on a normal schedule, Caterpillar said.
In total, revenue fell 23% to $ 9.88 billion, from $ 12.76 billion in the same quarter a year earlier. Profit fell 55% to $ 668 million.
3M said sales of N95 and other masks were $ 235 million higher than in the same quarter a year earlier. The company said it has sold 1.4 billion masks so far this year and is on track to sell 2 billion by the end of 2020 as it has more than tripled its production.
The company said its global sales grew 0.9%, excluding acquisitions and currency moves, including an increase of 5% in the United States and 8% in China. 3M posted a profit of $ 1.41 billion compared to $ 1.58 billion in the same period last year.
Write to Austen Hufford at [email protected]
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