US heavy equipment maker Caterpillar reported Thursday a steep drop in second-quarter profit and lowered its full-year sales forecast, citing the sluggish global economy and a stronger dollar.
Caterpillar said profit fell to $710 million in the April-June quarter, down 29 percent from $999 million a year ago.
Adjusted earnings tumbled 26 percent to $1.16 per share. Excluding restructuring costs, earnings per share at $1.27 were in line with market expectations.
Sales fell 13 percent to $12.3 billion for the maker of equipment for the construction, mining and oil sectors, considered a bellwether of the global economy. That missed analysts' consensus estimate of $12.6 billion.
Caterpillar ratcheted down its 2015 sales forecast to $49 billion from the January estimate of $50 billion, but kept unchanged its adjusted profit per share outlook of $5.00, excluding restructuring costs.
"Currency impacts from a stronger US dollar are causing sales in many countries to translate into fewer dollars than we initially expected," said Doug Oberhelman, Caterpillar chairman and chief executive, in a statement.
Oberhelman described economic conditions in the United States as "modestly positive" but said the global economy remained "relatively stagnant", with prices for commodities like oil, coal and iron ore looking unlikely to improve any time soon.
"Continuing economic weakness in China and Brazil, as well as uncertainty in the eurozone and over Greece, haven't helped confidence," he added.
Operating profit fell 23.4 percent year-over-year to $1.1 billion.
"We are committed to controlling costs as we manage through this downturn," Oberhleman said.
The Peoria, Illinois-based company has been restructuring for the past two years to face the challenges of the slowly growing global economy. It made headway on lowering operating costs, bringing costs in the first half of the year down by almost nine percent.
But sales declined in all regions. Sales in Latin America were the hardest hit, sliding 26 percent on lower demand, mostly from continued weak construction activity in Brazil, the company said.
Asia/Pacific sales fell 22 percent, driven largely by weaker demand for construction and mining equipment and products used in the oil and gas industries.
The stronger dollar negatively impacted sales in Europe, Africa and Middle East, helping to push them down 12 percent. North America sales fell 7.0 percent on lower demand in the construction and rail sectors.
But Caterpillar said its large manufacturing presence outside of the United States had a positive impact on operating profit. "Over half of the favorability for the quarter was due to the Japanese yen, as we are a net exporter from Japan," it noted.
Caterpillar announced a $1.5 billion share buyback program for the third quarter, in addition to the $500 million repurchased in the first half of 2015 and $4.2 billion in 2014.
Shares in Dow member Caterpillar dived 3.0 percent to $77.35 in opening trade.