Caterpillar profit drops for second successive quarter due to weak mining demand
Hit by dropping demand for mining equipment, Caterpillar (NYSE:CAT), the world's largest heavy equipment maker, said Wednesday it is cutting its 2013 profit forecast for the second successive quarter as it registered a 43.5% drop in earnings.
The Peoria-based manufacturer said net income was $960 million on revenues of $14.6 billion, down from last year's profit of $1.7 billion on revenues of $16.7 billion.
Revenue in the resource segment, which is dominated by mining, plunged 34% in the quarter to $3.6 billion, while revenue in construction industries dropped 9%.
Caterpillar said it expected inventories to be $3.5bn lower by the end of 2013 than at the end of last year, as mining companies worldwide continue to cut their spending.
“During the second quarter, dealers increased their utilisation of inventory from our product distribution centres, which allows them to meet customer demand with less inventory,” CEO Doug Oberhelman said in today's press release. “With the sharp reduction in dealer inventory and the decline in mining, 2013 is turning out to be a tough year and we’ve already taken action to reduce costs.”
The poor results come on the heels of massive layoffs in the USA and Canada. In April CAT cut 40% of its South Milwaukee factory workers and 460 workers at its Decatur, Illinois factory. The following month it added 330 workers to the list of lay-offs by closing its tunnel-boring machine factory in Ontario.
Caterpillar’s stock was down more than 2% to $1.72 at 11 am ET.