Cat cites higher tariffs announcing Q2 profit drop
On Aug. 5, Caterpillar, Inc. reported its total sales and revenues for the second quarter of 2025 were $16.569 billion, a decrease of $120 million, or 1%, compared with $16.689 billion in the second quarter of 2024. The decrease was primarily due to unfavorable price realization of $414 million, partially offset by higher sales volume of $237 million and higher financial products’ revenues of $46 million. Higher sales volume was mainly driven by higher sales of equipment to end users. In the three primary segments, sales were higher in Energy & Transportation (its largest segment) and lower in Construction Industries and Resource Industries.
Operating profit for the second quarter of 2025 was $2.860 billion, a decrease of $622 million, or 18%, compared with $3.482 billion in the second quarter of 2024. The decrease was mainly due to unfavorable manufacturing costs. “The decrease was mainly a factor of unfavorable manufacturing costs, largely reflecting the impact of higher tariffs,” said Andrew Bonfield, CFO.
“The Caterpillar team remained focused on customer success and demonstrated solid operational performance this quarter,” said CEO Joe Creed. “We continued to see strong orders across our segments as demand remains resilient supported by infrastructure spending and growing energy needs.”
Construction Industries
Construction Industries’ total sales were $6.190 billion in the second quarter of 2025, a decrease of $493 million, or 7%, compared with $6.683 billion in the second quarter of 2024. The decrease was primarily due to unfavorable price realization. Sales volume was also lower, primarily driven by the impact from changes in dealer inventories. Dealer inventory decreased during the second quarter of 2025, while remaining about flat during the second quarter of 2024.
Construction Industries’ segment profit was $1.244 billion in the second quarter of 2025, a decrease of $497 million, or 29%, compared with $1.741 billion in the second quarter of 2024. The decrease was mainly due to unfavorable price realization. In addition, tariffs were also higher.
In North America, sales decreased by 15% compared to Q2 2024 due to unfavorable price realization and lower sales volume. Lower sales volume was mainly driven by the impact from changes in dealer inventories. Dealer inventory decreased during the second quarter of 2025, compared with an increase during the second quarter of 2024.
- Latin America, down by 20%
- EAME, up by 13%
- Asia/Pacific, up by 6%
Expectations Full Year 2025
- 2025 full-year sales and revenues slightly higher as compared to 2024, an improvement versus previous expectations of about flat
- 2025 full-year services revenues about flat as compared to 2024, slightly lower than our previous expectations
- 2025 net incremental tariffs around $1.3B to $1.5B
- Excluding the net impact of incremental tariffs, 2025 full-year adjusted operating profit margin in the top half of the annual target range
- Including the net impact of incremental tariffs, 2025 full-year adjusted operating profit margin in the bottom half of the annual target range
