Caterpillar's Sales Decline Slows In April Period

DOW JONES NEWSWIRES

CHICAGO (Dow Jones)

Caterpillar Inc.'s (CAT) sales decline slowed significantly in April from a year ago, as demand for construction equipment continued to strengthen in Asia and improved in North America, according to sales figures released Thursday by the company.

Caterpillar, the world's largest manufacturer of construction equipment, said worldwide sales of its equipment fell 4% in the three-month period ended in April, compared with the same period a year earlier. The decline is more than 60% less than the rate of decline reported for the three months ended in March when machinery sales fell 11%. February sales were down 20%.

Asia-Pacific sales for the April period rose 13% from a year earlier.

Asia has been Caterpillar's strongest geographic market in recent months.

Company executives have cited accelerated construction activity in developing countries, particularly China and India, as the driver for rebounding sales in the region. The Chinese government's economic stimulus strategy has emphasized public infrastructure projects like highways and airports that require construction machinery.

Improving demand for mined commodities, such as coal and iron ore, also is providing a lift for sales of Caterpillar mining equipment in Australia and other Asian mining hubs. North American sales were down 5% in April from a year ago.

That's a marked improvement from March when sales were down 21% and from February when sales were off 30%. The U.S. construction industry has been among the hardest hit sectors by the economic recession and the home mortgage crisis that brought construction of new homes to nearly a standstill in the past 18 months.

The improvement in North America sales is particularly beneficial for Caterpillar.

The region accounted for 39% of the Peoria, Ill., company's machinery sales in 2009 and it maintains dominant market shares in many equipment categories.

Caterpillar continues to struggle in Europe, where a government debt crisis is providing headwinds for an economic recovery. Sales in Europe, Africa and the Middle East were down 14% in April from a year ago. For the March period, sales fell 18%. Latin American sales slipped 10% in April, improving from a 15% decline in March and a 20% decrease in February.

Caterpillar's engine business remains a weak spot for the company, but the sales decline continued to ease. Engine sales were down 21% in the April period from a year ago. March engine sales were off 30%, while sales in February were down 33%.

The industrial sector continued to be the best-performing end-market for engines.

Sales were up 5% in April after being down 1% in March and off 15% in February.

Caterpillar quit making commercial truck engines at the end of 2009 and opted to include any residual truck engine sales in the industrial segment.
Engine sales to the petroleum industry were down 29%, a significant improvement the 44% decline reported in March. Engine sales for electricity generation were down 14% in April, half the rate of decline seen in March.