As demand from the mining industry continues to weaken, the world's largest maker of mining and construction equipment had slashed its outlook for the year. Caterpillar, Inc. suffered a 43.5% drop in profits this quarter, brought about by dealers' steep inventory reductions and reduced demand from the industry. Dealers had cut inventories by USD 1 billion this quarter alone while Caterpillar also reduced its own inventories by USD 1.2 billion.

This is bound to aggravate the situation for the company that has already cut its workforce by 8% last year. Company representatives had already told Reuters that there will be cost-paring in the second half of this year but did not give further details.

Chairman and chief executive of Caterpillar Doug Oberhelman remains optimistic. "There's no question there's a slowdown. But long-term ... mining is a great place to be," told CNBC.  Around the world, mining companies are holding off on expansions and undertaking belt-tightening measures to lower their operating expenditures.