) -- one of the biggest manufacturers of construction and mining
equipment -- posted lower-than-expected quarterly results and cut
its full year forecast. The bellwether cited weak demand from its
mining customers, its most profitable product category, as the
primary source of Caterpillar's sour quarter. In 2014, Caterpillar
estimates revenue will be essentially flat to +/-5% compared to
2013. For the year, the company now expects revenues to come in
around $55 billion versus the previously forecasted $58 billion
Caterpillar is not the only company that has taken a hit from the
global decline in metals demand. For mining and exploration
companies, 2013 has been somewhat of a brutal year. Metal miners in
particular have been hit significantly this year as falling metal
prices, weaker demand, and rising operational costs continue to
plague the industry.
A Bleak Outlook for Caterpillar
Caterpillar Chairman and CEO Doug Oberhelman stated, "It has been a
painful year and has required wide ranging and substantial actions
across the company. There are encouraging signs, but there is also
a good deal of uncertainty worldwide as we look ahead to 2014."
Sales and revenues for the company came in nearly $11 billion lower
than last year -- a 17% decline, of which 75% of the drop is
attributed to its Resource Industries division, which is
Caterpillar also stated that it had temporarily shuttered some of
its plants, furloughed thousands employees, and reduced its
workforce by 3,000 in the third quarter alone. Also feeling the
pinch, major mining companies like
) have both cut billions of dollars of capital expenditure just
Despite Caterpillar's bleak report and outlook, there have been
some relatively positive results in the mining industry this year.
BHP Billiton recently reported that it has raised its iron ore
production forecast for 2014 to 212 million tonnes after operations
in Western Australia hit record output in July-September.
Freeport-McMoRan Copper & Gold
) also managed to post better-than-expected results, beating third
quarter estimates. And though its oil and gas segment were the main
drivers of revenue growth for the quarter, the company did see
rising sales of copper and gold, despite lower prices.
Outside of the metals space, there have been some bright spots in
the mining world, particularly in the raw materials that not many
investors pay attention to, such as diamonds and industrial
), a major producer of monocrystaline sand, a mineral that is used
to enhance the recovery rates of hydrocarbons from oil and natural
gas wells, has gained more than 100% year-to-date.
Mountain Province Diamonds
(NYSEMKT:MDM), has also posted solid performances, rising more than
20% in 2013.
But with earnings season still in progress, investors should
continue to keep a close eye on other major mining companies
results and outlooks, as these will give potential buyers a better
feel for the mining industry's future.
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Editor's note: This article by Daniela Pylypczak was originally