The Peoria, Illinois-based company said earnings slid as mining companies and other customers scaled back purchases amid slumping commodity prices, the credit freeze and tough market conditions. The results reflect the troubled state of the global economy as Caterpillar's products are used worldwide in a range of industries.
Caterpillar, an economic bellwether and component of the Dow Jones industrial average, earned $661 million, or $1.08 per share, during the three months ended Dec. 31. It earned $975 million, or $1.50 per share, in the same period a year earlier.
Revenue rose 6 percent to $12.92 billion.
Analysts, on average, expected Caterpillar to report earnings of $1.31 per share on revenue of $12.84 billion, according to a survey by Thomson Reuters. In recent weeks, analysts have forecast continued weak earnings for Caterpillar and other U.S.-based machinery firms, pointing to the weakening construction and mining markets and an infrastructure spending plan proposed by President Barack Obama that may not boost equipment demand anytime soon.
The company forecast sales and revenues of $40 billion, or $2.50 per share in 2009, down from $51.32 billion, or $5.66, last year. It said it had taken actions to remove about 20,000 workers, including Caterpillar employees, contract and agency workers.
Caterpillar, which employs more than 112,000 people worldwide, has expanded dramatically in recent years, driven by surging demand spurred by infrastructure projects in developing countries, particularly in Asia. But that demand has waned with the weakening global economy.
In response to the worsening conditions, the company has announced plans to lay off workers, slash executive compensation by up to 50 percent and offer buyouts to U.S.-based employees. It also instituted a global hiring freeze.
Investors hope Obama's infrastructure spending program will bolster demand for road-building and other equipment made by Caterpillar. But analysts warn the plan may have little near-term impact on equipment demand, and that proposed figures would be insufficient to help given steep declines in the U.S. construction market.