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While Caterpillar (NYSE:CAT) lowered its earnings forecast for 2015, the company’s chief executive officer Doug Oberhelman said at a Las Vegas mining-equipment trade show on Monday that China’s economy should be “recovering fairly well” by year’s end.
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During Monday’s presentation at the MINExpo, Caterpillar told analysts that the company expects to earn $12 to $18 per share in 2015. Previously, the world’s largest maker of earth-moving equipment had forecast earnings of $15 to $20 per share, but prices for coal and iron have declined this year, causing many in the mining sector to rethink capital expenditures.
Since approximately 70 percent of a mining company’s spending is on heavy equipment, cuts in capital expenditures have hurt manufacturers, like Caterpillar and Komatsu, particularly hard. Next year, only three of the world’s largest eight miners are increasing capital expenditures. Vale (NYSE:VALE), which had the largest capex budget, intends to cut its 2013 mining budget by 4 percent.
Slower growth in China and countries worldwide have also contributed to capital expenditure cuts. But Oberhelman said in Las Vegas that the long-term outlook for the mining industry remains strong.
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