* Q2 profit down 70% y/y, revenue down 31% y/y
* Sees no improvement in Q3 sales and profit from Q2
* Does not reinstate full-year earnings guidance
* Share repurchases to remain suspended this year (Adds CEO's quote, details from earnings call, updates shareprice)By Rajesh Kumar SinghCHICAGO, July 31 (Reuters) - Caterpillar Inc onFriday predicted no improvement in equipment sales, an outlookthat sent its shares down after second-quarter earnings sankduring a crippling recession sparked by the coronaviruspandemic, which made customers wary of big purchases.The heavy equipment maker, a bellwether for economicactivity, reported a 23% drop in retail sales in the secondquarter and predicted a similar decline in the quarter throughSeptember. Caterpillar's outlook was bleaker than otherindustrial companies that have predicted the lifting of pandemicshutdowns will improve sales and its shares were last down 4.1%at $131.12.Profits in the current quarter are not forecast to improvefrom the last three months.Stephen Volkmann, equity analyst with Jefferies, saidCaterpillar's outlook was an "outlier.""Either they are being a little bit conservative or theyhave some visibility," he said.The manufacturer said global economic uncertainty wouldcontinue to weigh on its results. It declined to reinstatefull-year earnings guidance, withdrawn in late March. Sharerepurchases will also remain suspended this year.Caterpillar's earnings came a day after the U.S. economyreported its deepest contraction since the Great Depression.
The world's largest economy shrank at a 32.9% annualizedrate last quarter with a 37.7% plunge in spending on equipment,and a resurgence in new coronavirus cases has dimmed the outlookfor the current quarter.The international outlook also remained grim, with theInternational Monetary Fund predicting deeper contraction inglobal output this year.Reflecting weak equipment demand, Caterpillar raised itsestimates for reduction in dealer inventories to more than $2billion this year from $1.5 billion estimated earlier."It's a very fluid dynamic situation," Chief ExecutiveOfficer Jim Umpleby said on an earnings call.In response, it has cut production and is keeping a lid oncosts. It is prioritizing investment in services business, whichis expected to hold up better than equipment revenue in thedownturn.Revenue in the latest quarter was down an annual 31% with adouble-digit decline in equipment sales across all regions. Costcuts cushioned the hit on profit, which came in at 84 cents pershare, down 70% year-on-year. (Additional reporting by Rachit Vats; Editing by MargueritaChoy, David Evans and David Gregorio)
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