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Caterpillar withdraws 2020 outlook, suspends some operations, amid pandemic

Reuters | Updated: 26-03-2020 20:39 IST | Created: 26-03-2020 20:39 IST
Caterpillar withdraws 2020 outlook, suspends some operations, amid pandemic

Caterpillar Inc withdrew its earnings guidance for 2020 on Thursday and suspended some operations, citing economic uncertainty amid the novel coronavirus pandemic that has dented equipment sales and hit supply chains. In response to weak demand and disruptions due to the outbreak, the world's biggest construction and mining equipment maker said it was temporarily suspending operations at some facilities.

While its financial position remained "strong," the impact of the pandemic on its operations and finances could be "material," the company said. That impact "cannot be reasonably estimated at this time due to the rapid development and fluidity of the situation," it said in a regulatory filing.

In January, Caterpillar had forecast an adjusted profit of $8.50-$10 per share for this year. Shares were up 0.8% at $105.5 in morning trade.

The Deerfield, Illinois-based company is part of a growing list of U.S. companies that have withdrawn their earnings outlooks citing the coronavirus outbreak. The pandemic has exacerbated the travails of the U.S. industrial economy, which was already reeling from a prolonged U.S.-China trade dispute. Factory manufacturing activity slowed in February, hurt by a contraction in new orders.

Harley-Davidson Inc on Thursday withdrew its financial forecasts and warned further disruptions could dent its ability to supply and sell motorcycles. Earlier this week, farm equipment maker Deere & Co pulled back its 2020 earnings guidance as it struggled with the impact of shutdowns on its plants and supply chains.

The virus has resulted in more than 1,000 deaths in the United States, according to a running tally kept by Johns Hopkins University. To prevent its spread, at least 18 states have ordered residents to stay mostly indoors and "non-essential" businesses ordered closed. Caterpillar, considered a bellwether for economic activity, said it continued to run much of its U.S. domestic operations and planned to continue operations in other parts of the world, but said it may suspend operations at more facilities.

The company said it was executing business continuity plans which included utilizing alternative sources, air freight, redirecting orders to other distribution centers and prioritizing supply of its most vital equipment parts. (Additional reporting by Sanjana Shivdas in Bengaluru; Editing by Vinay Dwivedi and Bernadette Baum)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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