A slowdown in the mining business is digging a hole in Caterpillar’s profits.
First-quarter profit shrank 45 percent, and Caterpillar has lowered its expectations for full-year sales and profit because its mining business is slowing. Sales of Caterpillar-branded mining machines such as large trucks and bulldozers will drop by half this year, the company said Monday.
Caterpillar, based in Peoria, Ill., said mining customers placed big orders for equipment last year, but then mining profits fell, so now those customers are cutting back. Dealers who normally would be stocking up on Caterpillar gear to get ready for a busy summer instead cut inventory during the first quarter.
Executives said they had hoped that a slowdown in orders from dealers in late 2012 would turn around this year. “Unfortunately, that hasn’t happened,” said Mike DeWalt, the company’s controller, on a conference call. “Overall mining orders have remained depressed.”
Profit margins are higher for mining gear than for many of Caterpillar’s other products, making the slowdown more painful to the company’s bottom line.