By James Rogers
Caterpillar missed second-quarter profit expectations but sales beat forecasts and raised its full-year outlook
Shares of Caterpillar Inc. seesawed back into the green in morning trades Tuesday, after the maker of construction and mining equipment missed second-quarter profit expectations but beat on sales and raised its full-year growth outlook.
Speaking during a conference call to discuss the results, Caterpillar Chief Executive Joe Creed said that tariffs are expected to be a headwind to profitability in the remainder of the year.
“While we have taken initial mitigating actions to reduce the impact, tariff and trade negotiations continue to be fluid,” he said, according to a FactSet transcript. Creed added that Caterpillar will remain flexible and intends to implement longer-term actions once there is sufficient certainty.
In a presentation accompanying the results, Caterpillar said that it expects net incremental tariff costs of around $1.3 billion to $1.5 billion for the full year. This refers to tariffs announced in 2025 and expected to be in place on Aug. 7, including some mitigating actions and cost controls, the company said.
But the company now expects full-year 2025 sales to be “slightly higher” than in 2024, up from previous guidance of about flat.
For the third quarter, the company expects sales to “grow moderately” from a year ago, while the current average analyst revenue estimate compiled by FactSet of $16.01 billion implies 0.6% growth.
During the conference call, Creed said the net impact of tariffs in the second quarter was around the top end of the company’s estimated range and is likely to be “a more significant headwind to profitability” in the second half of 2025. Caterpillar had expected an additional second-quarter cost headwind of $250 million to $350 million as a result of tariffs.
In the presentation that accompanied the results, Caterpillar said that for the third quarter, it expects net incremental tariff costs of about $400 million to $500 million.
The stock was up 0.6% in morning trades, after seesawing in premarket trading. At one point, the stock was down as much as 4.5% premarket after earnings were reported.
For the quarter to June 30, net income fell 18.7% from the same period a year ago to $2.18 billion, while adjusted earnings per share, which excludes nonrecurring items, declined to $4.72 from $5.99. That was below the FactSet consensus of $4.89 and marked the second straight bottom-line miss and the third miss in four quarters.
Total sales slipped 0.7% to $16.57 billion, above the FactSet consensus of $16.30 billion, as an increase in sales volume was offset by the $414 million effect from lower prices.
Among Caterpillar’s largest business segments, energy and transportation sales rose 7% to top $7.84 billion, while construction-industries sales were down 7% to $6.19 billion, with both results topping expectations. Resource-industries revenue fell 4% year over year to $3.09 billion, but topped the FactSet consensus estimate of $2.86 billion.
Caterpillar said that its backlog grew by $2.5 billion during the second quarter, with increases across all three of the company’s primary segments.
Caterpillar shares are up 20.7% in 2025, compared with the S&P 500 index’s SPX gain of 7.8%.
-James Rogers
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08-05-25 0949ET
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