Caterpillar has reported its first decline in retail machinery sales in more than two and a half years on a slowdown in demand from Asia and North America.

The world’s biggest maker of earthmoving equipment by revenues reported that global machine sales had fallen 1 per cent in the three months ending in December compared to the same period a year earlier.

Analysts said the figures were a reflection of a drop in spending by mining companies due to low commodity prices and the general slowdown of the global construction business.

A 7 per cent drop in Asia-Pacific sales and a 6 per cent drop in North America drove the fall, even as Latin America saw a 14 per cent rise.

The company’s power systems business also saw a 2 per cent drop in global retail sales.

Last year, Caterpillar paused production at some plants amid weak global economic conditions. In October, the company cut its full-year 2012 earnings forecast from $9.60 per share to a range of $9.00 to $9.25, and its revenues forecast to $66bn from an earlier range of $68bn to $70bn.

Caterpillar will report fourth-quarter and full-year results on Monday.

The news comes a week after Caterpillar announced that it would take a charge of around $580m, or $0.87 per share, after it discovered accounting misconduct at a Chinese company it acquired last year. That charge brings the company’s 2012 earnings range down to $8.13-$8.38 per share.

The $886m purchase of ERA Mining Machinery in June last year represented Caterpillar’s latest attempt to crack China’s annual $64bn machinery market, which is dominated by local companies. The deal coincided with an economic downturn that has seen the company having to cope with rising inventory and excess manufacturing capacity on the mainland.

But Eric Ause, analyst with Fitch Ratings, said Caterpillar’s problem was bigger than China. “Asia is a big part, but Europe is also slow . . . and the US recovery has been weak,” he said.

Its shares were down just over 1 per cent to $95.58 at the close.

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