Industrial bellwether Caterpillar fell short of Wall Street estimates for quarterly profit today and cut its forecast for overall earnings in 2019.
The company today reported a 13% slide in Asia sales driven by weakening demand in China.
The results, the latest hint of the deepening fallout for companies of US-China trade tensions and a broader slowdown in the world's second-largest economy, sent shares in the heavy machinery maker down 5%.
Caterpillar said the slump in Asia was led by a 29% plunge in construction equipment sales.
It also said it was struggling against growing local competition and the broader economic slowdown as well as retailers slashing inventory.
"Dealer inventories rose by about $800m in the third-quarter last year as we were ramping up production to meet demand. Now as we see the end-markets slow, we are reducing the dealer inventories by $400m in the quarter," the company's chief financial officer Andrew Bonfie said.
Chief executive Jim Umpleby said demand in the fourth quarter is expected to be flat. Total sales and revenue for the third quarter ended September fell 5.6% to $12.76 billion.
"Sales in Asia/Pacific were lower across most of the region primarily due to lower demand in China, including unfavorable changes in dealer inventories, amid continued competitive pressures," the company said.
Caterpillar sales have improved since the company managed to halt a four-year slide in 2016, but Wall Street analysts have been warning that demand in more than half of its end markets had peaked and today's numbers also showed sales in North America fell 3%.
The company is seen as one of Wall Street's clearer gauges of the state of Chinese demand, and its impact on big western multinationals.
Caterpillar said the impact of tariffs imposed on its goods as a result of President Donald Trump's trade war with Beijing would now be lower than the $250-350m range it gave earlier this year.
But it also cut its 2019 expectations for profit to between $10.90 and $11.40 per share, compared with a previous estimate of $12.06 to $13.06.
Profit attributable to common stockholders fell to $1.49 billion, or $2.66 per share, in the three months ended September 30 from $1.73 billion, or $2.88 per share, a year earlier.
Analysts on average had expected Caterpillar to earn $2.88 per share, according to IBES data from Refinitiv.