Caterpillar said revenues were hit by lower demand for construction, energy and mining equipment and services, and the impact of changes in dealer inventories.

"Overall, we expect our sales in 2021 to be stronger due to the lack of dealer inventory reduction and improving market conditions. We also expect services revenues to increase during the year," chairman and CEO Jim Umpleby said on a results call.

For the December quarter, Caterpillar reported sales and revenues of US$11.2 billion, down about 15% year-on-year as expected, and broadly in line with consensus analyst estimates.

Adjusted profit per share was $2.12, down 22%, but above analyst forecasts.

Global Caterpillar dealers decreased inventories by $1.1 billion in the December quarter, roughly $400 million more than the company expected.

For the full year, dealers reduced inventories by $2.9 billion.

"This positions us well to produce closer to demand in 2021, which was our goal when we introduced our enhanced S&OP process," said Umpleby.

While Q4 sales fell by 10% yoy, Caterpillar said construction and mining sales were better than expected. Q4 2020 operating margins declined yoy but improved by 230 basis points versus Q3. "At 12.3%, they were better than we expected, reflecting better operational performance," said Umpleby.

The December quarter saw construction business revenues fall 10% yoy to $4.51 billion, resource industries drop 9% to $2.18 billion, and energy and transportation dip 19% to $4.81 billion.

Umpleby said metal prices were supportive of reinvestment and quoting activity "continued to be robust".

"The number of parked trucks continues to decline," he said. "We continue to see strong interest in autonomy. Heavy construction and quarry in aggregate markets remain uncertain.

"The US infrastructure bill would likely have a positive impact on these end markets."

Caterpillar's finance arm said 3.5% of customers were late on payments at the end of 2020, up from 3.1% at the end of 2019.

Full-year 2020 revenues were down 22% yoy at $41.7 billion, while headline earnings fell 42.5% to $6.56 per share.

Caterpillar paid out $2.2 billion in dividends during the year and repurchased $1.1 billion of common shares. Umpleby tipped the board was considering hiking dividends  this year to continue the trend of 27 consecutive years of returning more cash to owners.

Given continuing market uncertainty, the company declined to provide earnings guidance for 2021.

Caterpillar shares (NYSE:CAT) recently achieved a three-year high at $200.17, but have pulled back to $182.84, capitalising it at more than $99 billion.