Caterpillar has announced a year-on-year drop in Q1 mining sales of US$1.23 billion (37%) due to “lower end-user demand across all geographic regions,” the company said in a statement. Aftermarket part sales also declined worldwide, which the company blamed on some some companies delaying maintenance and rebuild activities.
“Although prices of most mined commodities remained above investment thresholds and mine production has improved, customers in all geographic regions have reduced spending across the mining industry,” the company’s results said. “We believe that mining companies are increasing productivity at existing mines, rather than investing in expansions or new mine openings, which results in lower demand for our mining products.”
Overall, its Resource Industries sector posted a profit of US$149 million in Q1 2014, compared with US$ 459 million in the same period last year.
Outlook remains bleak
The company has also cut back its forecast for mining sales this year, with Resource Industry sales expected to be down 20% on 2013. The previous outlook has forecast a drop of only 10%.
“The decline in expectations is a result of continued low order rates for mining equipment. If orders begin to improve, as we expect that they will at some point, it would likely not be in time to improve sales in 2014,” the company concluded in its release.
Brad Halverson, Caterpillar’s group president and chief financial offices, discusses Q1 results:
Adapted from press release by Jonathan Rowland
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