Demand for Caterpillar Inc.'s (CAT) construction and mining equipment in North America continues to outpace other regions of the world, but is showing signs of weakening as the company Tuesday reported an 11% increase in total sales in the three months to the end of June.
It was the 25th straight three-month period of retail sales growth for the world's largest seller of bulldozers, excavators and wheel loaders. But growth has been decelerating lately in most of Caterpillar's geographic markets, as tougher year-earlier comparisons and deteriorating economic conditions, particularly in Europe and Latin America, hold down sales increases.
World-wide dealer-reported machinery sales climbed 11% and 12% from a year earlier for the three months ended in May and April, respectively.
North America, which is the company's largest geographic market, continued to be the company's strongest market. But sales weakened against recent months. North America sales rose 24% in the three months to June 30, following a 31% increase in May and a 32% increase in April.
Caterpillar has attributed North America's sales performance to the replacement of worn-out machinery whose life cycle was extended because of the 2008 economic recession. Caterpillar dealers also have expanded their inventories of machinery and increased or replaced their rental fleets. But the weakening sales growth compared with prior months suggests that the run up in North America sales is running out of momentum.
Sales in Latin America continued to be weak but improving in the midst of tough economic conditions, especially in Brazil. Caterpillar's June sales from the region were down 3% from a year earlier, following a 6% decline during May and a 13% decrease in April.
Sales growth in Europe, Africa and the Middle East weakened further from recent months. June sales were flat with a year ago, after increasing 4% during May and rising 14% in April.
Asia Pacific sales rose 16% in June as China's dismal construction machinery market benefited from easier year-ago sales comparisons. Sales from the region rose 5% during both the May and April periods.
Caterpillar's engine business remained choppy, as overall sales rose 7% in the May period, after increasing 2% in May and rising 5% in April. Sales of engines for generating electric power dropped 11% during June, after falling 19% during the May period and slipping 15% in April.
Transportation industry sales, which includes engines for ships and railroad locomotives, rose 19% during the June period, following a 9% increase during the May period and an 14% increase in April.
Caterpillar's stock Tuesday opened up 1.5 at $82.84 a share.
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