CHICAGO (Reuters) – Caterpillar Inc said on Monday that quarterly earnings fell more than 32 percent and warned of a tough year ahead as the downturn that began in the United States metastasized into a full-blown global recession that hit sales of its earth-moving equipment.
The company also warned that profit in 2009 would be under severe pressure and said that it would cut about 17,000 workers and buy out 2,500 others, to reduce costs in the face of what it predicted would be the weakest year for business since the end of World War Two.
The news sent the company's shares skidding more than 10 percent in premarket trading.
The company reported a fourth-quarter profit of $661 million, or $1.08 a share, compared with $975 million, or $1.50 a share, last year.
Sales rose 6 percent to $12.92 billion.
Analysts, on average, expected the Peoria, Illinois-based company to report a profit of $1.28 a share on sales of $11.97 billion.
After shrugging off the downturn in U.S. housing that sparked the worldwide crisis, Caterpillar and other makers of bulldozers, dump trucks and excavators have suddenly faced a world of challenges, including a drop in spending by their well-heeled energy and mining customers.
Results last week from rival CNH Global NV and a profit forecast cut from Komatsu Ltd starkly confirmed that global demand for construction and mining equipment took a sharp turn down in the fourth quarter.
"We knew Caterpillar was going to be a disaster." said Eli Lustgarten, an analyst at Longbow Research. "We just didn't know the magnitude of it. And it's ugly."
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