Caterpillar told analysts that its adjusted operating profit and adjusted profit per share set records for its second quarter, despite sales declines compared to the same period a year ago. The adjustment covers losses on the divestiture of two “non-U.S. entities,” leaving operating profit at $3.7 billion and profit per share at $5.99 for the quarter. Both were stronger than expected. Caterpillar said operating profit margin of 20.9% offset the decline in second-quarter sales.
Q2 sales were $16.7 billion, down 4% from $17.2 billion in the same period a year ago. The $629 million decrease reflects $1.2 billion less sales partially offset by price increases. The sales drop was due to reduction in dealer inventory, said Andrew Bonfield, CFO. Bonfield said despite the “challenging comparison” to a strong Q2 2023, it expects operating profit to be higher than expected for the full year. He said Q2 2024 sales were “slightly disappointing.”
Construction segment sales were $6.7 billion, down 7% from the $7.2 billion reported in Q2 2023. The decrease was primarily due to lower sales volume of $588 million, partially offset by price increases of $178 million. The decrease in volume resulted from flat dealer inventory, according to Caterpillar. Sales in North America were flat at $4.0 billion. Lower sales volume to end users was offset by price increases.
Construction segment machine sales for the quarter were down 3% compared to Q2 2023, based on unit sales data reported by its dealers. Sales were up 4% in Latin America, and down 5% for the world.
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Bonfield said to expect machine prices to “moderate,” but said they will continue to exceed increases in manufacturing costs. He said to expect continued normalization as availability improves. The company is “continuing to add value,” said Jim Umpleby, chairman/CEO, so it’s not price only. He cited Caterpillar’s strong dealer network and investments in technology and service capabilities.
Sales declines in construction were also tied to a slowing of sales into rental fleets. Umpleby said the rental segment is an important one for the company’s dealers. He said dealer rental income is up for the quarter, and “we are bullish on rental.”
“We want our dealers to have profitable, growing rental businesses,” so Caterpillar’s focus is on utilization, Umpleby said. “We don’t want them to take more equipment from us than they need.”
“They are managing their fleets,” Bonfield said. He said Caterpillar is “comfortable” with the rental opportunities with dealers.
About the Author
Rod Sutton
Sutton served as the editorial lead of Construction Equipment from 2001 through 2025.