Caterpillar reported a lower quarterly profit on Wednesday and cut its outlook for full-year earnings, saying its independent dealers were focused on reducing machine inventories rather than building them up.
"We're actually producing and selling to dealers far less than they're selling to end-users and their customers," Caterpillar Chairman and CEO Doug Oberhelman told CNBC shortly after the company's earnings were released. "That bodes well for the future, but has certainly been a drag on earnings."
The company, the world's largest maker of mining and construction equipment, reported a second-quarter profit of $960 million, or $1.45 a share, down from $1.70 billion, or $2.54, in the period last year. Analysts had expected Caterpillar to report earnings of $1.70 a share.
Its stock price dropped on the news. (Click here to get the latest quotes for Caterpillar.)
Oberhelman said in a "Squawk Box" interview that a slowdown in mining over the last 12 months also hurt profits. "All of our big mining customers are certainly spending less on capital," he said. "We're seeing new exploration cutbacks."
That's exactly what closely followed investor Jim Chanos argued when making his case for shorting Caterpillar stock during the CNBC-Institutional Investor Delivering Alpha Conference last week. Chanos, the founder of Kynikos Associates, said a slowdown in mining is going to cut into Caterpillar's earnings faster and deeper than investors expect.
(Read more: Jim Chanos says mining slump will hurt Caterpillar)
Reacting to Chanos's thesis, Oberhelman said on CNBC Wednesday, "I'm used to 'Monday Morning Quarterbacking' by lots of angles. What we are trying to do here ... is make [things] within our four walls operationally very solid."
"We know this cycle will end in mining. When we come out, we'll be lean. We're doing a lot of cost-reduction," Oberhelman explained. "We can take advantage of that in this soft spot."
Caterpillar, which also makes locomotives, gas turbines, diesel engines, and generators, said sales fell nearly 16 percent to $14.62 billion in the quarter—short of the consensus estimate of $14.93 billion.
On Tuesday, Caterpillar released unaudited dealer data showing a slowdown in sales of its heavy equipment everywhere except North America. "United States [is] good and steady," Oberhelman said Wednesday.
The world's largest maker of construction and mining equipment said global dealer sales of its yellow earth-moving machines were down 8 percent year-over-year in June. That represented a deterioration from May, when dealers reported that global equipment sales were down 7 percent from a year earlier. The slowdown in June was led by dealer sales in the Asia Pacific region, which tumbled 21 percent. In May, those sales were down 14 percent.