PROFITS at plant giant Caterpillar slumped by 37 per cent in 1999 following poor sales and heavy price competition.
The slowdown in sales led to Cat's first drop in year-on-year turnover for eight years.
The US-based company posted a net profit of £573 million in the year to December 31, while turn-over was £11.9 billion, down 6 per cent on 1998.
The poor sales were blamed on a mixture of factors including price competition, lower sales of high-margin equipment and a strong US dollar.
Cat was only saved by an improved performance from its Cat Financial leasing division - which posted a 14 per cent increase in turnover to £775 million - and by cost-cutting in sales and research and development.
Cat chairman Glen Barton conceded that the results fell some way short of its early forecasts.
He said: 'Profit was significantly lower than we anticipated at the beginning of the year due to weaker machine demand in the second half and ongoing price competition.'
The impact on Cat's sales of its core products - agricultural and construction equipment ranging from skid steers to tracked excavators -was even greater. Sales fell 13 per cent to £7.1 billion while operating profits plunged 45 per cent to £525 million.
Cat's home North American market was hardest hit with sales down in all market sectors.
However, the picture was brighter in Europe, particularly in the UK, France, Italy and Germany, where sales all increased.
Mr Barton said that changes would be put in place to try and improve the performance.
'In 2000, we anticipate sales and revenues and profits will improve, with higher sales expected in every region of the world except North America,' he said.