LONDON The top
executive of Caterpillar Inc. remains optimistic about the
prospects for the mining industry despite a decline in activity
virtually halving company profits.
The mining and heavy
equipment producer posted second-quarter net income of $960
million, down 43.5 percent from nearly $1.7 billion in the same
period a year earlier, on a 15.8-percent decline in revenue to
But chairman and chief
executive officer Doug Oberhelman said he maintained a positive
view of the mining sector. "Weve taken action to
aggressively (reduce) costs, and weve been successful in
the market with end-user demand for Cat machines outpacing the
industry overall. In addition, our business in China improved,
and our sales and end-user demand for Cat machines were up in
the quarter, (although) the overall construction equipment
industry was down," he said.
The company has
revised down its revenue outlook for 2013 to a range of $56
billion to $58 billion from $57 billion to $61 billion
"We now expect a more
significant reduction in dealer machine inventory. Thats
the main reason for the reduction in the sales and revenues
outlook," Oberhelman said. "During the second quarter, dealers
increased their utilization of inventory from our product
distribution centers, which allows them to meet customer
(demand) with less inventory. With the sharp reduction in
dealer inventory and (the) decline in mining, 2013 is turning
out to be a tough year."
The remainder of 2013
will remain a tough environment for mining, according to
Caterpillar, which expects to continue selling less mining
equipment to dealers than dealers are delivering to end-users.
"Mining has proven to be a very cyclical business, and we
understand that," Oberhelman said. "Our long-term view remains
positive for mining. The world needs mined commodities and we
believe that demand will continue to increase."
A version of this article was first published by AMM sister
publication Metal Bulletin.