Caterpillar’s global retail machinery sales declined 12 per cent for the three months ended June 30th as demand for heavy machinery remained sluggish in all of the company’s core markets amid a slowdown in construction and mining activity.

According to Caterpillar, the largest decline in machinery sales was in Latin America, down 38 per cent from a year ago.

“The demand environment continues to be weak in Latin America,” Lawrence De Maria, an analyst at William Blair said in a research note. “There is limited visibility on how long the recession lasts.”

Caterpillar, the world’s largest heavy equipment manufacturer, is scheduled to report second-quarter results on July 26th and analysts expect earnings per share to be 96 cents on $10 billion in revenue.

The company posted revenues of $12.3 billion in the second quarter of 2015. The Peoria, Illinois-based company has seen machinery sales steadily decline since posting record sales in 2012.

At the end of 2015, Caterpillar’s full year global sales were $47 billion, down about 40 per cent from 2012.

In June, a company spokesperson said Caterpillar’s first-quarter outlook reflected expectations of 2016 as the fourth down year of sales and revenues.

Machinery sales

Total machinery sales were also down 12 per cent in North America, down 7 per cent in the Asia Pacific region, and down 4 per cent in the Europe, Middle East and Africa region for the rolling three-month period ending in June.

All four main geographic regions, North America, Latin America, Asia Pacific and Europe, Middle East and Africa, were down double digits in Caterpillar’s Resource Industries segment, which mainly sells equipment for the mining industry.

“Mining-related businesses have taken another leg down because of the depressed commodity prices, but there is some optimism that it could stabilise next year,” De Maria said.

In the construction industries segment, sales fell 36 percent in Latin America and eight per cent in North America. Meanwhile they rose 3 per cent in the Europe, Middle East and African region and rose 1 percent in the Asia Pacific region. “

China's economy seems to be improving which could provide upside to Caterpillar's Construction and Resource businesses," Ann Duignan said in a research note. – Reuters