MINNEAPOLIS (AP) — A slowdown in the mining business is digging a hole in Caterpillar's profits.
First-quarter profit shrank 45 percent. Caterpillar lowered its expectations for full year sales and profit because its mining business is slowing. Sales of Caterpillar-branded mining machines will drop by half this year, the company said on Monday.
Caterpillar, based in Peoria, Ill., said mining customers placed big orders for equipment last year, just as mining profits fell, so now those customers are cutting back. Dealers who would normally be stocking up on Caterpillar gear to get ready for a busy summer instead cut inventory during the first quarter.
Caterpillar has already started cutting costs. On April 5 it said it would lay off more than 460 employees at a mining truck plant in Decatur, Ill. Caterpillar also announced mining-related layoffs in Milwaukee and plans to cut 1,300 of 3,400 jobs at a plant near Brussels that makes excavators, loading vehicles, and engine parts. This year's capital spending — which covers big-ticket items like factories and computer systems — will fall below $3 billion, down from $3.4 billion last year.
"We're definitely in a down-cycle right now, but long-term it's a great business for us," Chairman and CEO Doug Oberhelman on a conference call.
