July 27 (Bloomberg) -- Hitachi Construction Machinery Co., Asia’s second-largest maker of earthmoving equipment, swung to a first-quarter loss as the recession eroded sales and cut its full-year earnings forecast.

The net loss was 8.6 billion yen ($90.6 million) for the three months ended June 30 compared with a profit of 12.5 billion yen a year earlier, the Tokyo-based company said today in a statement. Sales fell 43 percent to 132.3 billion yen.

Demand plummeted this year as the global economic slowdown triggered a market slump. The company today forecast global industry excavator demand would drop more than it anticipated this fiscal year, as stronger demand in China and Southeast Asia fails to offset declines in the U.S., Europe and Japan.

“We haven’t yet seen signs of a rebound in demand in markets such as Japan, Europe and Russia,” Chief Financial Officer Nobuhiko Kuwahara told reporters today in Tokyo.

Hitachi Construction Machinery reduced its full-year profit outlook to 5 billion yen, 29 percent less than its previous forecast and down 73 percent from a year earlier.

Global demand for excavators will fall 25 percent to 120,600 units for the year to March 31, compared with an earlier forecast for a 20 percent drop, according to a presentation released by the company.

Japan’s export and domestic shipments plunged by 65 percent to 69.2 billion yen in May compared with a year earlier, according to the Tokyo-based Japan Construction Equipment Manufacturers Association.

Operating Loss

The company’s operating loss, or sales minus the cost of goods sold and administrative expenses, was 2.4 billion yen for the past quarter, compared with a profit of 24.4 billion yen a year earlier, the statement said.

Hitachi Construction Machinery is on schedule to complete an inventory cutback by the end of September, Kuwahara said.

Tokyo-based Komatsu Ltd., the world’s second-largest maker of construction machinery, will report its first-quarter result tomorrow.

Shares of Hitachi Construction Machinery, which have advanced 55 percent this year, rose 0.8 percent to close at 1,613 yen on the Tokyo Stock Exchange. The result was announced after the market closed.

To contact the reporter on this story: Masumi Suga in Tokyo at msuga@bloomberg.net

Last Updated: July 27, 2009 03:50 EDT