Caterpillar Inc., (NYSE: CAT) the world’s largest maker of mining and construction machinery announced fourth quarter earnings Monday.

Chief Executive Officer Jim Owens “Then we were whipsawed in the fourth quarter as key industries were hit by a rapidly deteriorating global economy and plunging commodity prices. In anticipation of lower demand we encouraged dealers to align inventory with declining volume, and they responded with significant order cancellations, particularly in December.”

Profit after tax dropped by 32 per cent compared to fourth quarter 2008 results. 2009 sales expected to plunge 25%.

Outlook 2009

“Global economic conditions and key commodity prices have continued to decline significantly. Financial markets remain under stress, and our expectations for 2009 have deteriorated. Uncertainty around the depth and duration of this recession makes it very difficult to forecast sales and revenues. As a result, Caterpillar is rapidly executing strategic “trough” plans and implementing actions throughout the company to deal with a very challenging global business environment. We have initiated actions which will remove about 20,000 workers from our business and every indirect spend dollar will be heavily scrutinized.”

Full Press Release can be downloaded on Caterpillar website:

Caterpillar, which employs nearly 113,000 people worldwide, has expanded dramatically in recent years, helped by surging demand arising from infrastructure projects in developing countries, particularly in Asia. At the end of 2008, Caterpillar employed 11,554 more people than it did a year earlier.

Caterpillar Inc shares currently trading around $32.99, down over 5o per cent in the last 12 months.