Despite this, the company’s quarterly dividend will be up 15%.

The company’s sales and revenues for the third quarter were $US13.4 billion ($A13.9 billion), down from the $16.4 billion in the third quarter of 2012.

Profit per share for the third quarter was $1.45, down from the $2.54 a share recorded in the same period last year.

It is in spite of the company cutting costs and capital expenditure by a combined $1.1 billion so far this year.

The company had been expecting its 2013 sales and revenues to range between $56 million and $58 million with profit share of about $6.50 at the middle of that range.

It expects sales and revenues for 2013 to be about $55 billion with profit per share of about $5.50.

In a sobering reflection on the state of the mining industry, Caterpillar reckons it is doing better than its mining competitors.

It is also pessimistic about mining equipment sales bouncing back in 2014, even though it believes the global economic outlook to be favourable.

“This year has proven to be difficult with expected sales and revenues nearly $11 billion lower than last year,” Caterpillar chairman and CEO Doug Oberhelman said.

“That is a 17% decline from 2012 with about 75% drop from resource industries, which is principally mining.

“We expect resource industries to be down close to 40% for the full year and power systems’ and construction industries’ sales to each be down about 5%.”

Orders for new mining equipment began to drop significantly in mid-2012 and have continued at very low levels.

As a result of weak orders and feedback from end-users, the sales outlook provided in January included a decline in mining sales.

At that time, based on strong mine production for many commodities, Caterpillar’s outlook expected order rates would improve later in the year.

“Unfortunately, order rates have not picked up much despite continuing strong commodity production,” Oberhelman said.

“That has caused us to ratchet down sales and revenues outlook as we have moved through 2013.”

The company expects to limit the decline in 2013 operating profit from 2012 to about 30% of the sales and revenue change.

This is at the high end of the company’s incremental operating profit pull through target range and is a result of unfavourable profit mix as the sales decline is weighted towards higher margin mining products.

Caterpillar has taken substantial actions to lower production, costs and employment.

It has already shut down some plants temporarily and laid off more than 13,000 from its global workforce through the year.

It also reduced program spending, substantially lowered incentive pay, lowered capital expenditures and implemented general austerity measures across the company.

While it has been a tough year for sales and profit, it has been a positive year for cash flow.

In the third quarter, the machinery and power systems operating cash flow was $2.1 billion.

Indeed, Caterpillar expects 2013 to be its second best year ever for cash flow and not far from its all-time record.

The strong cash flow has allowed the company to improve its balance sheet, buy back $2 billion in Caterpillar stock this year, raise the quarterly dividend by 15% and improve the debt to capital ratio.

At the end of the third quarter its debt to equity ratio was 34% and is expected to improve further by year’s end. This is a big improvement from the 58% debt to equity ratio at the end of 2008.

“With $11 billion coming off the top line it has been a painful year and has required wide ranging and substantial actions across the company,” Oberhelman said.

“Year to date, excluding the impact of inventory absorption, we’ve lowered costs about $700 million and reduced capital expenditures by about $400 million.

“We’ve continued to improve our operational performance this year and it’s unfortunate that the improvements we’ve made have been far overshadowed by the sales decline in mining.

“Safety levels in our factories continue to improve and product quality is better – we see it in our metrics and are hearing it from our dealers and customers.

“While our machine sales our down, in most industries, including mining, we’re doing better than our competitors as a whole and that includes those in China.

“Our year-to-date sales in China are up, including an increase of almost 30% in the third quarter of 2013.

“Our balance sheet is the strongest in years.”

Looking to 2014, Caterpillar is holding its sales outlook flat with 2013 in a plus or minus 5% range.

It expects sales growth in construction industries, relatively flat sales in power systems and a decline in resource industries sales – despite higher mine production around the world.

It believes there will be better world growth next year, although there are some risks and uncertainties to temper that.

“There are encouraging signs but there is also a good deal of uncertainty worldwide as we look ahead to 2014 and our preliminary outlook reflects that uncertainty,” Oberhelman said.

“Despite prospects for improved economic growth and continued strong mine production around the world, we won’t increase our expectations for resource industries until mining orders improve.

“We can’t change the economy or industry demand but we’ve taken many actions to align our costs with the environment we’re in currently.

“While we’ve done much already, we’re not finished and expect to take deeper actions to improve our cost structure and balance sheet.

“We’re not seeing bright spots in mining yet but the turnaround will happen at some point and, when it does, we’ll be ready to respond.”

On the point of cost reductions, it appears further lay-offs are on the cards and Caterpillar may do away with some of its smaller facilities.