Caterpillar Misses Profit Estimates as Tariffs Push Up Costs
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Caterpillar Inc. reported lower-than-expected quarterly profit as the cost of tariffs and slightly lower prices eroded margins for the company’s iconic yellow diggers and bulldozers.
The results show the evolving impact of U.S. trade policy on the industries that Caterpillar serves, as tariff-driven headwinds push up manufacturing costs, hurting profit even as sales volume remained steady. The net impact from tariffs in the second quarter was at the top end of the company’s estimated range of $250 million to $350 million disclosed in April.
Caterpillar — seen as a bellwether of the health of the global economy — saw total sales slip in both construction and resource industries, while its energy and transportation unit posted higher sales.
For the year, Caterpillar said it expects to face net incremental tariffs of around $1.3 billion to $1.5 billion — including as much as $500 million in this quarter. Including the impact of tariffs, the machinery maker now expects full-year adjusted operating profit margin in the bottom half of its annual target range.
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Shares of the Irving, Texas-based company fell 3.6% as of 7:11 a.m. in New York, before the start of regular trading.
“We continued to see strong orders across our segments as demand remains resilient supported by infrastructure spending and growing energy needs,” CEO Joe Creed said in the earnings statement. Creed succeeded Jim Umpleby as CEO in May.
The heavy equipment maker posted adjusted earnings of $4.72 a share, falling short of the $4.88 median estimate of analysts polled by Bloomberg. Including the impact of tariffs, Caterpillar now expects full-year adjusted operating profit margin in the bottom half of its annual target range.
