Kit sales decline

The market for sales of construction equipment has shrunk considerably over the past year and looks set to continue at this lower level at least until the beginning of 2002.

This is the picture painted by second-quarter financial results from two of the sector's biggest manufacturers - Caterpillar and CNH Global.

The catalyst for this fall in sales has been the effect of a general economic slowdown on capital expenditure on construction machinery in North America.

Compared to last year, Caterpillar predicts a fall of 15% in the sales of construction machines in North America, with only stagnation or slight growth throughout the rest of the world. The biggest fall has been in the North American plant rental market where investment has been significantly reduced.

CNH Global predicts a worldwide drop of up to 10% in sales in the sectors that it serves, with the decline also greatest in North America. The company said that further deterioration is not expected, but neither is any significant recovery anticipated this year.

The two companies' interim results reveal that Caterpillar suffered a 14% fall in profit for the second quarter of this year compared to last year, from £228m to £197m. This was in spite of a 2% increase in second-quarter sales to £3.98bn.

CNH revenues from worldwide sales of construction equipment were down by 10% compared to the same period last year, although returns improved with a second-quarter profit of £4.35m compared to a loss of £22.5m incurred last year.