By Lisa Von Ahn
(Reuters) - Caterpillar Inc (NYSE:CAT) slashed its 2015 revenue forecast and said it could cut up to 10,000 jobs through 2018, on Thursday joining a list of big U.S. industrial companies grappling with the shock waves from the mining and energy downturn.
The stock fell as much as 8 percent to a five-year low and also pulled down shares of other industrial companies and knocked about 30 points off the Dow Jones industrial average.
Over the past year, miners and oil companies have slashed budgets and put expansion projects on hold as prices of raw materials - from crude oil, copper, coal and iron ore - have plunged to six-year lows amid lingering worries about oversupplies and China's slowing economic growth. As a result, orders for equipment have dried up.
Caterpillar, the world's biggest construction and mining equipment maker, has also been hit by a slowdown in industrial activity in China.
Earlier this month, mining equipment maker Joy Global Inc (NYSE:JOY) issued a profit warning as it struggles to adapt to slowing demand for its services.
Deere & Co, the world's largest maker of farm equipment, announced layoffs of more than 900 plant employees in January as declining grain prices have hurt demand for agricultural machinery.
Caterpillar had raised its 2015 profit forecast in April and affirmed it in July.
"That they had hung in with their guidance for so long was probably the most surprising, given the ... accumulating evidence around them that things were slowing," said Morningstar analyst Kwame Webb.
Caterpillar expects revenue to fall in 2015, for the third straight year, to $48 billion (£31.5 billion), below the average analyst estimate of $48.82 billion, as compiled by Thomson Reuters I/B/E/S.
For 2016, the company forecast a 5 percent revenue decline, mainly in higher-margin products, to about $45.6 billion. Analysts had expected $47.36 billion.
"2016 would mark the first time in Caterpillar's 90-year history that sales and revenues have decreased four years in a row," the Peoria, Illinois-based company said in a statement.
Caterpillar said it will update its 2015 profit forecast when it releases third-quarter results in late October. It expects to provide a 2016 earnings outlook in January.
"We are facing a convergence of challenging marketplace conditions in key regions and industry sectors - namely in mining and energy," Chief Executive Officer Doug Oberhelman said in a statement.
Caterpillar's announcement was no surprise to Bill Hickey, president of Lapham-Hickey, a Chicago-based supplier to the company's road construction and road equipment operations.
"There is way, way too much capacity worldwide, and the question is, how long will the cycle last?" he said. "Our best guess is that there is going to be oversupply on steel and other commodities until maybe late next year."
Caterpillar said it will cut 4,000 to 5,000 jobs by the end of 2016, most of them coming in 2015. It has already reduced its workforce by more than 31,000 since mid-2012.
The company had 114,233 employees as of Dec. 31, 2014 according to Thomson Reuters data.
The company expects to incur about $2 billion in pretax costs from the restructuring and save about $1.5 billion annually.
Caterpillar said it might close or consolidate more than 20 plants around the world across its three large businesses - construction, resources, and energy and transportation.
Shares of Caterpillar, which already had fallen 23 percent this year, dropped 6 percent at $66.03 in midday trading. The Standard & Poor's industrial index was down 1.4 percent.