Dec. 19 (Bloomberg) — Komatsu Ltd., the world’s second- largest maker of earthmovers, will slash capital spending on facilities used to make construction and mining equipment due to the severe business outlook, Executive Officer Kunio Noji said.

The Tokyo-based company will spend about 30 billion yen ($338.8 million) on plant and equipment used to produce construction and mining machinery, which accounts for 85 percent of annual revenue, Chief Executive Officer Kunio Noji said in an interview. Komatsu invested a record 70 billion yen in this business in the current period.

“We’ll need about 30 billion yen to maintain safety levels and replace old machines, but we won’t invest to expand output,” Noji, 62, said in the interview in Tokyo. “These tough times will probably continue next fiscal year.”

The slumping global economy and strong yen are threatening Tokyo-based Komatsu’s earnings outlook. Komatsu was targeting a fifth straight year of record profits this year until the effects of the global credit crisis undermined demand for construction and mining equipment, prompting the company to cut its forecasts on Oct. 29.

The company now expects to earn 2.38 trillion yen in revenue, 300 billion in operating profit and 190 billion yen in net profit.

Komatsu shares fell 4.5 percent to 1,073 yen on the Tokyo Stock Exchange

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