Caterpillar reports 10% drop in sales for Q1 2025
On April 30, Caterpillar announced Q1 2025 results, reporting a 10% decrease in sales and revenues, to $14.2 billion down from $15.8 billion in the first quarter of 2024. The decrease was primarily due to lower sales volume of $1.1 billion and unfavorable price realization of $250 million. Lower sales volume was mainly driven by the impact from changes in dealer inventories.
In the company’s presentation, CFO Andrew Bonfield said, “Lower volume was driven mainly by the changes in dealer inventory last year. We also saw the negative price realization in construction industries that actually drove a lot better sales to users as the benefit of our merchandising program started to come through. Construction sales were down 19% that was mostly due to the dealer inventory that I mentioned a moment ago.”
“Obviously, we’ve moved into a period of great economic uncertainty. The situation is very uncertain, very fluid and may change. If we looked at our sales forecast for the quarter, had it not been for tariffs, we would have actually raised our guidance to have sales be about flat for the year versus slightly down.”
“Short term, we’re taking some actions as we can to mitigate the cost of tariffs. If those tariffs become permanent, we will obviously have to take more action. It’s a bit more challenging because obviously our supply chain is very established and it’s not something we can just change quickly and overnight. There are things we’ve got to do but we’ve been around for 100 years we’ve managed these situations. We’re a global company we have a global supply chain and we are very resilient,” said Bonfield.
Tariff Pressures and Cost Headwinds
Looking ahead, Caterpillar warned of tariff-related cost headwinds of $250 million to $350 million in Q2, which could compress margins. The company also anticipates lower adjusted operating profit margins compared to the same quarter last year, citing pricing pressures and the ongoing impact of tariffs.
