Still, adjusted profit and revenue were better than analysts expected for a company considered a bellwether for global economic growth.
U.S.-based Caterpillar (CAT) makes construction and mining equipment as well as power generators, so its growth rises and falls with the world's economy.
For the fourth quarter, Caterpillar earned $697 million, or $1.04 per share. That was down from a profit of $1.55 billion, or $2.32 per share, a year earlier.
Revenue fell 7% to $16.08 billion as dealers reduced inventory.
The most recent quarter included a charge of 87 cents per share to write down a new purchase in China. Not counting that, analysts surveyed by FactSet had been expecting a profit of $1.70 per share.