NEW YORK CITY -- Slumping industrial giant Caterpillar (IW 500/18) on Wednesday reported a 44% drop in profits and again slashed its 2013 full-year forecast due to weakness in the mining sector.
The company, which sells machinery and engines to the construction, mining and petroleum sectors, said net income for the third quarter was $946 million on revenues of $13.4 billion, down from the year-ago levels of $1.7 billion on revenues of $16.4 billion.
That translated into earnings per share of $1.45, well below the $1.67 forecast by analysts.
Caterpillar earnings have been pressured all year by depressed spending in the mining sector, where the company said new investment remains tepid even as mining production has stayed strong. Nearly 80% of the decline in revenues were due to a drop in resource industry investment.
The company has undertaken a number of cost-saving moves including reducing more than 13,000 staff, instituting temporary layoffs, reducing program spending and implementing lower capital investment.
For the third quarter in a row, Caterpillar slashed its 2013 profit forecast. It now expects revenues of about $55 billion, down from a range of $56-$58 billion. Profits are projected at $5.50 per share, down from the previous $6.50 benchmark.
The company expects better world growth in 2014, but pointed to "significant risks and uncertainties" that overshadow the outlook, including messy U.S. fiscal politics, continued eurozone weakness and bumps in China's transition to a more consumer-demand led economy.
Caterpillar now sees 2014 sales and revenues as flat compared with 2013, with a plus or minus 5% range.
"There are encouraging signs, but there is also a good deal of uncertainty worldwide as we look ahead to 2014, and our preliminary outlook reflects that uncertainty," said Caterpillar chief executive Doug Oberhelman.
Caterpillar's exposure to the mining sector, which is oriented around metals investment and coal production, increased after its 2011 $8.8 billion acquisition of Bucyrus International.
Caterpillar said that recent mining orders have improved from their lows, but "remain very low" for mining products. As a result, the company is not projecting higher mining sales in 2014 and sees cost-cutting efforts continuing. But demand can "change quickly," the company added.
"While we are working to reduce costs, we are not expecting to make substantial changes in capacity. We need to be ready when the industry improves."
Copyright Agence France-Presse, 2013