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Both numbers are down significantly from last year due to a slump in mining demand, as they were in the first quarter, and the heavy equipment manufacturer has again cut its outlook for sales and profit for the rest of the year.
Second quarter sales and revenue fell 16 percent between 2012 and 2013 while profits fell 43 percent. Caterpillar CEO Doug Oberhelman attributed the difference to several different factors.
“We experienced headwinds during the quarter, and while we had a positive $135 million gain related to the Siwei settlement, it was more than offset by currency translation and hedging losses, an additional $1 billion of dealer machine inventory reductions and a decline of $1.2 billion in our own inventory,” he said in a prepared statement.
Oberhelman said the $1 billion reduction in dealer inventory was more than the company previously expected and hurt sales and profit for the quarter. Oberhelman expects dealer inventory to decline between $1.5 billion and $2 billion in the second half of this year to finish $3.5 billion lower than at the end of 2012.
“That means that we are underselling end-user demand this year, and it sets us up for better sales in 2014,” he added.
Because of the continued expected inventory declines, the company cut its sales outlook for 2013 from a range of $57 billion to $61 billion down to $56 billion to $58 billion. It also cut its profit per share outlook down from $7.00 to $6.50.
“During the first half of the year, we’ve had temporary factory shutdowns, rolling layoffs throughout much of the company, reductions in our flexible workforce, and we’ve reduced discretionary and program costs. While we’ve taken significant action already, we will be taking additional cost reduction measures in the second half of 2013,” Oberhelman said.
Despite the losses, Oberhelman said he is “pleased” with how the company has performed and that the company expects profit to improve in the second half of the year.
“Operationally, we’ve done very well. We’ve taken action to aggressively lower costs, and we’ve been successful in the marketplace with end-user demand for Cat machines outpacing the industry overall,” he said. “In addition, our business in China improved—our sales and end-user demand for Cat machines were up in the quarter while the overall construction equipment industry was down.”