(Adds details about the company's markets, performance and analyst quote.)
By Bob Tita
Of DOW JONES NEWSWIRES
CHICAGO -(Dow Jones)- Caterpillar Inc. (CAT) said sales continued to tumble in October, dimming optimism that demand for construction machinery is improving with the uptick in economic growth.
Caterpillar, the world's largest manufacturer of construction machinery by sales, said worldwide machinery sales declined 50% in the three-month period ended in October, compared with the same period a year earlier. Global sales were down 52% for the three months ended in September.
Caterpillar, a component of the Dow Jones Industrial Average, was recently trading down 2.3% at $58.06 a share. The company is one of the leading decliners Thursday among the Dow Jones index's 30 stocks.
Widespread sales weakness was seen across the company's geographic markets. Three-month sales in North America were down 58% through October from a year ago, while sales in Europe, the Middle East and Africa were down 53%. Latin American sales fell 41% in October, the same rate of decline reported in September.
In the Asia Pacific region, which includes China where demand for equipment is expected to be a catalyst for the company's sales recovery, October sales slipped 36%, slightly better than the 40% decline reported in September.
"I think we're going to stay at these levels for a while," said Lawrence De Maria, an analyst in New York for Sterne Agee and Leach. "There will some growth in emerging markets, but developed markets on balance will continue to be extremely weak."
Caterpillar is widely expected to benefit from increased spending on public infrastructure and the resumption of U.S. economic growth. But experts note the company continues to face a glut of unsold equipment on dealer lots and customers whose buying power has been diminished by stricter credit requirements.
Surging prices for mined commodities and red-hot housing and commercial construction markets lifted the Peoria, Ill., company's sales to record levels in recent years. But demand for machinery plunged this year amid lower commodity prices and a collapse of construction activity in the global economic recession.
Sales of Caterpillar engines dropped 30% in the October period from a year ago. Falling sales were reported in all of the company's engine market segments, led by the truck and buses market, where sales were down 63% because of the steep decline in commercial truck sales this year. Caterpillar intends to exit the truck engine market at the end of the year, allowing it to focus more of its engine sales efforts on the industrial and energy markets.
But petroleum market engine sales were off 19% in October. In September, petroleum market engine sales were down 13%. Industrial engines sales were down 49%.
-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com
(END) Dow Jones Newswires
11-19-091339ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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