Caterpillar’s mining business had another tough quarter as sales dropped across all geographical regions on lower end-used demand. Total sales for Q3 reached only US$2.2 billion – down US$496 million (19%) on the same period last year.
The drop was most pronounced in Latin America, where sales were down a hefty 31%, and Europe, Africa and the Middle East, where sales were down 25%. In contrast, North America and Asia Pacific faired better, with sales dropping only 10% and 13% respectively.
Operating profit dropped by US$239 million to US$147 million – 62% down on Q3 2013, the result of higher expenses and lower prices. The company blamed new product roll outs and increased incentive compensation for the higher expenses, while an “increasingly competitive pricing environment” saw the money the company gets for its equipment drop.
“Although prices of some mined commodities remained above investment thresholds, customers in all geographic regions have reduced spending across the mining industry,” the company said in its earnings statement. “Mining companies are increasing productivity at existing mines and improving their transportation infrastructure rather than investing in expansions or new mine openings, which results in lower demand for our equipment.”
Overall, Q3 sales and revenues were US$13.5 billion – an increase from US$13.4 billion on the same period last year – with a 13% rise in Caterpillar’s Energy & Transportation divisions sales helping to offset weaker performance in the mining and construction sectors.
Written by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/mining/24102014/world-coal-caterpillar-mining-sales-remain-weak-through-q3-2014-coal1445/