Industrial giant Caterpillar Wednesday cut its 2013 profit forecast after reporting a 43.5 percent drop in second-quarter earnings due to weak demand in its operating segments, especially mining.
Caterpillar, which sells machinery and engines to the construction, mining and petroleum sectors, said net income came in at $960 million on revenues of $14.6 billion, down from last year's profit of $1.7 billion on revenues of $16.7 billion.
Those results translated into $1.45 earnings per share, below the $1.70 forecast by analysts. Revenues also fell short of the $14.9 billion estimate.
The company had previously flagged mining equipment demand as a weak point given that several large miners like Rio Tinto had cut back capital spending in light of weaker metals demand in China and elsewhere. Revenue in the resource segment, which is dominated by mining, tumbled 34 percent to $3.6 billion.
Revenue in construction industries dropped 9 percent, while power systems revenue dipped 5 percent.
Caterpillar chief executive Doug Oberhelman said a big driver of the lower earnings was a sharp $1 billion reduction in dealer machine inventories, as the company's dealers sell more products from Caterpillar product demand centers and hold less product themselves.
The company expects an additional $1.5-$2 billion in inventory declines in the second half of 2013.
"With the sharp reduction in dealer inventory and the decline in mining, 2013 is turning out to be a tough year and we've already taken action to reduce costs," Oberhelman said, citing temporary factory shutdowns, rolling layoffs and other cuts.
Caterpillar cut its 2013 profit forecast to about $6.50 per share on revenue of $56 to $58 billion. The prior estimates were $7 earnings per share and $57 to $61 in revenue.
Dow member Caterpillar's shares were down 0.9 percent in pre-market trading.