At a time when the COVID-19 pandemic has disrupted global supply chains, crashed China’s economy, and now could tip the US economy into recession, Caterpillar has announced in a new update, that it is yanking its financial outlook for 2020 and halting production at some US facilities.
“The magnitude of the COVID-19 pandemic, including the extent of any impact on Caterpillar’s business, financial position, results of operations or liquidity, which could be material, cannot be reasonably estimated at this time due to the rapid development and fluidity of the situation,” the company said in a statement Thursday.
Caterpillar said the fast-spreading virus had disrupted its domestic operations:
“…due to uncertain economic conditions resulting in weaker demand, potential supply constraints and the spread of the COVID-19 pandemic and related government actions, Caterpillar is temporarily suspending operations at certain facilities.“
As a result of the virus crisis, Caterpillar withdrew its financial outlook for 2020. Further updates will be provided in an upcoming earnings announcement on April 28.
It remains to be seen if Caterpillar has asked the US government for short term loans to weather a downturn. If so, that would mean the company would have to suspend dividends and buybacks for the duration of the loans, a move that could lead to a more extended decline in the company’s stock.
Caterpillar shares were rather mute on today’s depressing news.