Caterpillar Inc. reported lower quarterly profit than expected and cut its full-year forecast as weak demand for mining equipment continues to plague the company.
In its quarterly report, the largest producer of earth-moving equipment lowered its full-year guidance to earnings of $5.50 a share and revenue of $55 billion. Its previous outlook called for earnings of $6.50 a share on revenue of $56 billion to $58 billion. Third quarter revenue of $13.4 billion in 2013 was down from $16.4 billion in the third quarter of 2012. Third-quarter profit of $946 million, or $1.45 a share was down from $1.7 billion, or $2.54 a share, a year earlier.
"Unfortunately, order rates have not picked up much despite continuing strong commodity production," said Chairman and Chief Executive Doug Oberhelman. "That has caused us to ratchet down our sales and revenues outlook as we have moved through 2013."
The global mining boom helped Caterpillar rebound quickly from the 2008 recession. However, the company is facing tougher year-earlier comparisons in most geographic markets. Falling demand for mining equipment because of lower prices for mined commodities, such as iron ore and copper, has also pressured sales of mining equipment.
And the tough times are expected to continue in the near-term. Caterpillar provided its first forecast for 2014 sales, saying it expects revenue next year to be essentially flat to up or down 5 percent compared with 2013.
In response, Caterpillar has temporarily shuttered some plants, furloughed thousands of salaried and management employees, and reduced its full-time workforce by 3,000 workers during the third quarter. Over the past year, the company has cut 13,000 jobs - about 10 percent of the global total, Reuters reported.
With no uptick in orders expected, Caterpillar said it now expects a full-year 2013 profit of $5.50 a share on sales of about $55 billion, down from an earlier forecast of $6.50 a share on sales of $56 billion to $58 billion.
The revised sales outlook is nearly $11 billion lower than what Caterpillar posted last year.
Caterpillar’s sales from resource industries, made up mainly of mining, have expanded since Oberhelman chairman and chief executive officer in 2010. Caterpillar bought Bucyrus International Inc. in 2011 and ERA Mining Machinery Ltd. in China last year.
Copper futures have fallen 7.9 percent in the past year in New York as growth in China, the largest consumer of the metal, has slowed. New CEOs at some of the world’s largest miners, including BHP Billiton Ltd. (BHP) and Rio Tinto Group, have announced spending cuts mainly driven by a reduction in new-mine projects.