Facing a global commodity glut with no end in sight, Caterpillar Inc. announced that its third-quarter earnings plunged 44 percent and it cut its economic forecast again.
The Peoria, Ill.-based company said revenues from its mining equipment manufacturing business, which is based in Oak Creek and operates a plant in South Milwaukee, will fall by 40 percent.
“With $11 billion coming off the top line, it has been a painful year and has required wide ranging and substantial actions across the company,” chairman and chief executive officer Doug Oberhelman said.
Until this year, rising commodity prices had fueled a mining boom. But slower growth in China’s economy hurt demand for mining gear there, as well as in Australia.
Caterpillar has been shutting factories and cutting its workforce by some 13,000 people, and temporarily laid off thousands of salaried workers.
The company announced third-quarter sales and revenues of $13.423 billion, down from $16.445 billion in the third quarter of 2012. Profit per share for the third quarter of 2013 was $1.45, down from third-quarter 2012 profit per share of $2.54.
The company has revised its 2013 outlook and now expects sales and revenues to be about $55 billion, with profit per share of about $5.50. The previous outlook for 2013 sales and revenues was a range of $56 billion to $58 billion with profit per share of about $6.50 at the middle of that range.
“This year has proven to be difficult, with expected sales and revenues nearly $11 billion lower than last year. That is a 17 percent decline from 2012, with about 75 percent of the drop from Resource Industries, which is principally mining. We expect Resource Industries to be down close to 40 percent for the full year and Power Systems’ and Construction Industries’ sales to each be down about 5 percent,” Oberhelman said.
Orders for new mining equipment began to drop significantly in mid-2012 and have continued at very low levels.
“Unfortunately, order rates have not picked up much despite continuing strong commodity production. That has caused us to ratchet down our sales and revenues outlook as we have moved through 2013,” Oberhelman said.