Mining equipment maker Caterpillar’s worldwide dealer machinery sales dropped 10% for the three months ended in September amid a drop in spend by commodity producers
The company’s forecast for its 2015 earnings was gloomy with the current slump in sales the result of commodity producers reducing capital expenditure amid a commodity price pinch.
Increase in Q2 profit
The company’s reported a 4% increase in second-quarter profit this year. However, its second half sales for 2014 reflect slumping demand in China and turmoil in Russia and the Middle East.
The forecast for 2014 sales is a range of $54 billion to $56 billion, compared with an earlier prediction of $53.2 billion to $58.8 billion, according to reports.
Drop in mining sales
The worst affected of the mining and construction equipment makers divisions was the resources segment, made up mainly by mining equipment, which sank by 28% compared to the same period last year.
The company said in July that it expected weaker sales of construction equipment in the second half of the year in key markets, including China.
To cope with weak mining demand, Caterpillar has closed plants and laid off workers. Its global labour force stood at 131 631 at the end of the second quarter, down about 5% from a year earlier.
The equipment maker was scheduled to report third-quarter earnings Thursday.
Caterpillar executives said mining companies eventually will have to repair or replace more machines. “We don’t know when it will come back, but it’s coming back,” CEO Doug Oberhelman told analysts earlier this year.