Caterpillar Inc.'s chief executive took responsibility for the accounting scandal at a Chinese company the heavy equipment maker purchased last year.
"I recognize that the decision to acquire Siwei happened on my watch and the buck stops at my desk. I am accountable for that acquisition," Doug Oberhelman, Caterpillar's chairman and chief executive, said in a conference call.
Earlier this month, Caterpillar said it uncovered a "deliberate, multi-year, coordinated accounting misconduct" at ERA Mining Machinery Ltd., including its subsidiary known as Siwei. Caterpillar wrote off most of the about $700 million deal, lowering fourth-quarter results by 87 cents per share.
Oberhelman on Monday said that several senior managers at Siwei inflated sales, understated costs, over-reported profit and fabricated documents to cover their tracks. The investigation into the accounting misconduct continues, he said.
"We were deliberately misled by the accounting misconduct at Siwei, and we are considering all options to recover our losses and hold those responsible accountable for their wrongdoing," Oberhelman said.
Caterpillar's fourth-quarter profit fell 55 percent from a year ago to $697 million, or $1.04 per share, on lower sales and the $580 million write off of ERA. Revenue fell by 7 percent to $16.1 billion. Caterpillar said dealers reduced their inventory by about $600 million, lowering sales by $1.4 billion.
Caterpillar scaled back production and reduced its inventory by $2 billion, a measure that is likely to continue through the first quarter of 2013. Full-year profit was up 15 percent to $5.68 billion, or $8.48 per share, on revenues of $65.9 billion.
Caterpillar said it expects 2013 profits of $7 to $9 per share on revenues of $60 billion to $68 billion. The company expects revenues to fall by more than $2 billion in the first quarter of 2013.
The company expects slow growth in 2013 of at least 2.5 percent globally, with a recovery in the U.S. housing industry and a decline in construction activity in Europe due to the region's fiscal austerity measures. In China, the company is expecting improvement over a 2012 slowdown, with economic growth near 8.5 percent for the year.
Shares were up by 1.3 percent to $96.79 in mid-day trading.
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