Caterpillar (CAT) - Get Report posted weaker-than-expected third quarter earnings Wednesday, while lowering it full-year profit outlook, as weakening Asia sales amid the ongoing U.S.-China trade war hammered its bottom line.

Caterpillar said earnings for the three months ending in September came in at $2.66 per share, down 7% from the same period last year and well shy of the Street consensus forecast of $2.90 per share. Group revenues were also disappointing, with the company pegging them at $12.8 billion, down 5.1% from last year and missing analysts' estimates of a $13.5 billion tally.

Caterpillar said it will cut its full-year profit target to between $10.90 and $11.40 per share, compared to a prior range of $12.06 to $13.06 per share, adding the new range assumes "modestly lower sales" for 2019 when compared to last year.

"In the fourth quarter, we now expect end-user demand to be flat and dealers to make further inventory reductions due to global economic uncertainty," said CEO Jim Umpleby. "Caterpillar's improved lead times, along with these dealer inventory reductions, will enable us to respond quickly to positive or negative developments in the global economy in 2020."We are expanding our offerings and investing in services, including digital capabilities, to drive long-term profitable growth, while continuing to achieve our Investor Day targets for improved financial performance."

Caterpillar shares were marked 5% lower in pre-market trading immediately following the earnings release, but reversed those declines to gain 0.75% after it said the impact of tariffs for this year would be below its previous guidance of between $250 and $350 million. Shares were last seen changing hands at at $134.60 each.

Caterpillar said the primary driver for the group's revenue slide was a $1.2 billion "movement" in dealers' inventories, who clipped their stock of equipment by $400 million during the quarter, compared to an increase of $800 million over the same period last year.

Our volumes declined as dealers reduced their inventories, and end-user demand, while positive, was lower than our expectations," Umpleby said. "We remain focused on executing our strategy and continuing to achieve our Investor Day targets for margin improvement and free cash flow.

North American sales, Caterpillar said, rose 3% to $2.728 billion, while Asia Pacific sales plunged 29% to $1.086 billion as the impact of the U.S.-China trade dispute hit regional activity hard.