Big boys of equipment game show the strain

THE supply side is still showing the strain of the downturn with two equipment heavyweights, Caterpillar and Terex, suffering from reduced equipment sales and slashed revenues.
Big boys of equipment game show the strain Big boys of equipment game show the strain Big boys of equipment game show the strain Big boys of equipment game show the strain Big boys of equipment game show the strain

Greg Rowan, senior inspector of mines, Queensland Government Natural
Resources & Mines

Kate Haycock

United States-based Caterpillar, which also services the construction, oil and gas, and agriculture sectors, reported sales and revenues of $US8 billion for the second quarter, down 41% year-on-year from $13.6 billion.

The company’s second-quarter profit of $371 million was down $735 million from $1.1 billion in the second quarter of 2008.

The manufacturer attributed the decline to lower sales volumes and $85 million spent on redundancy costs.

Mining accounts for around 25% of Caterpillar’s new machinery sales.

The company’s chairman and chief executive, Jim Owens, said while there was still plenty of economic uncertainty dogging the industry, there were signs of stabilisation.

“We’ve seen many key commodity prices increase from their lows in the first quarter and they are holding in a range that is usually positive for investment,” Owens said.

US-listed Terex today reported a net loss for the second quarter of $77.6 million, compared to net income of $236.3 million for the second quarter of 2008.

Net sales for the quarter decreased by 55% year-on-year, from $2.9 billion to $1.32 billion.

This brings full-year sales down 49% from the previous comparable period.

“The turmoil from the ongoing recession continues to deeply impact sales for our industry,” Terex chairman and chief executive officer Ron DeFeo said.

Mining accounts for around 24% of Terex’s net sales and DeFeo said the market was showing signs of further decline, with the company’s net sales for the materials processing and mining segment falling $264.9 million, or 38.9% year-on-year, to $416.6 million.

However, Terex said there was some good news from the mining sector with its mining equipment sales benefiting from a “favourable product mix oriented towards larger trucks”.

The large equipment manufacturer said the mining business parts market was also showing some signs of improvement.

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