(RTTNews) - Construction and mining equipment maker Caterpillar Inc. (CAT: News ) on Tuesday reported a 53% drop in profit for the third quarter, hurt by lower machinery and engine sales. The results for the quarter, however, exceeded analysts' expectations. The company tightened its earnings outlook for fiscal year 2009, saying that the third quarter was its low point in the recession and it was now seeing signs of a recovery.

For fiscal year 2010, the company projects sales and revenues to increase 10%-25% from the midpoint of the 2009 outlook range, partly due to the end of dealer inventory reductions that significantly impacted sales in 2009.

The global recession has had a negative impact on Caterpillar, affecting customer demand and increasing inventory levels. In April, the company reported its first quarterly loss in 17 years, hurt by lower sales and charges related to job cuts. The company has adopted drastic cost-cutting measures to combat the economic crisis. Going by its latest announcements, the situation is slowly improving for the company. In early August, Caterpillar indicated that its strategic planning, including inventory reduction and cost management, has positioned it for long-term profitability.

Third-Quarter Results

The Peoria, Illinois-based company reported net income for the third quarter of $404 million, or $0.64 per share, down from $868 million, or $1.39 per share, in the year-ago quarter. On average, 22 analysts polled by Thomson Reuters expect the company to earn $0.06 per share for the quarter. Analysts' estimates typically exclude special items.

Total sales and revenues for the third quarter were $7.30 billion, down 44% from $12.98 billion in the year-ago period, primarily due to significantly lower sales volume. Analysts had a consensus revenue estimate for the quarter of $7.49 billion.
Jim Owens, Chairman and Chief Executive Officer of Caterpillar said, "We are pleased with this quarter's profit given the severe economic environment and with our sales well below end-user demand as dealers continue to aggressively draw down inventories."

Owens added, "We believe the third quarter marked the low point for Caterpillar sales and revenues in what has been the toughest recession since the 1930s. We are seeing encouraging signs that indicate a recovery may be underway."

Peer Performance

Among others in the industry, Deere & Co. (DE:) is slated to announce financial results for the fourth quarter on November 25. Analysts expect the company to report earnings of $0.04 per share on revenues of $4.41 billion.

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