Caterpillar (CAT) is seeing a slowdown, even in high growth markets like Asia. In its latest April series sales data, the company recorded a decline in sales growth in almost all regions, except North America where sales are up by 32%.

While Caterpillar has cited unfavorable economic conditions, particularly in Europe and Latin America, as responsible for this drop, the company's good performance earlier is also making these numbers look weaker than usual.

Caterpillar principally competes with other industrial equipment manufacturers like CNH Global NV (CNH), Komatsu and Volvo AB. We currently have a Trefis price estimate of $108 for Caterpillar's Stock, which is 20% above the current market price.

The company's robust North American performance is due to the replacement demand being generated by North American dealers. Dealers held off replacing old inventory during the financial crisis of 2008 and so we are seeing orders from pent up demand. Caterpillar's dealers in the region have expanded their inventories and also increased or replaced their rental fleets.

Asia Pacific continued to be weak for Caterpillar. Its sales grew at just 5% in the period ending April as compared to 15% in the three months ending March. The softening of the Chinese economy has resulting in lower construction and infrastructure thus hurting Caterpillar's business. Latin America sales declined by 13%, as compared to 6% in the period ending March. This decline has been attributed mainly to the poor macro-economic conditions, resulting in acute operating conditions particularly in Brazil.

Europe, Africa and Middle East sales grew 14% as compared to 21% in March. The slow down was primarily due to Europe, where the sovereign debt crisis has become much more severe than expected.

Caterpillar's engine business showed signs of revival, growing its sales by 5% in April after falling 1% in March. While the sales of engines to the petroleum industry grew 26% in April as compared to 12% last month, the sales of of engines for generating electric power continued to fall, following their 19% decline last month with a 15% decline in April.

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