New York (AFP) - Caterpillar reported disappointing earnings amid weakening demand for machinery in China, and signaled Wednesday it expects full-year profits to be at the low end of expectations.
The company, an industrial bellwether that manufactures equipment for the construction, mining and oil industries, said slower activity in China dented construction sales in the second quarter.
The results sent the company's share price sharply lower.
Higher material costs and the strong US dollar also weighed on some business lines, the company said.
Net income 5.1 percent from the second quarter of 2018, to $1.6 billion. That translated into $2.83 a share, well below the $3.12 expected.
Revenues rose three percent to $14.4 billion.
The geography of Caterpillar's sales showed a stark contrast between strong and weak regions, with North American revenues jumping 28 percent and Asia Pacific falling 22 percent.
Caterpillar confirmed that it still expects earnings to be between $12.06 and $13.06 a share for the year, but it "currently expects to be at the lower end of the range," it said in a press release.
However, Jim Umpleby, the company's chief executive, emphasized that strong cashflow enabled the company to repurchase shares and pay $1.8 billion in dividends.
The company's share price slumped about 5.0 percent in pre-market trading to $131.29.
