Cat sets sales record, misses on profit largely due to tariffs

On Oct. 29, Caterpillar Inc. announced third-quarter 2025 financial results, reporting sales and revenues were $17.6 billion, a 10% increase compared with $16.1 billion in Q3 2024. The increase was primarily due to higher sales volume, mainly driven by higher sales of equipment to end users.

The manufacturer reported an operating profit margin of 17.3% for the Q3 2025, compared with 19.5% for the third quarter of 2024. Adjusted operating profit margin was 17.5% for the third quarter of 2025, compared with 20.0% for the third quarter of 2024. Third-quarter 2025 profit per share was $4.88, compared with third-quarter 2024 profit per share of $5.06.

The company repeated throughout its news release and presentation that “unfavorable manufacturing costs were largely due to the impact of higher tariffs.” Caterpillar said it now expected tariff expenses for 2025 to be between $1.6 billion to $1.75 billion, up from its previously stated expectation of $1.3 billion to $1.5 billion. Tariff expenses factored into the company’s $686 million increase in production costs during the third quarter.

The decrease, the company reported, was mainly due to unfavorable manufacturing costs of $686 million, unfavorable price realization of $191 million and higher selling, general and administrative (SG&A) and research and development (R&D) expenses of $129 million. This was partially offset by the profit impact of higher sales volume of $700 million, favorable other operating income/expense of $180 million and lower restructuring costs of $33 million. Unfavorable manufacturing costs largely reflected the impact of higher tariffs. The increase in SG&A/R&D expenses was primarily driven by higher compensation expenses, including higher short-term incentive compensation expense. Favorable other operating income/expense included proceeds from an insurance claim.

“Solid performance from our team generated strong results this quarter, driven by resilient demand and focused execution across our three primary segments,” said Caterpillar CEO Joe Creed. “Our team’s continued discipline in a dynamic environment, coupled with a growing backlog, positions us for sustained momentum and long-term profitable growth.”

Construction Segment

Construction Industries’ total sales were $6.760 billion in the third quarter of 2025, an increase of $415 million, or 7%, compared with $6.345 billion in Q3 2024. The increase in sales was mainly due to higher sales volume of $568 million and favorable currency impacts of $69 million, primarily related to the euro, partially offset by unfavorable price realization of $262 million. Higher sales volume was primarily driven by higher sales of equipment to end users. Construction Industries’ segment profit was $1.377 billion in the third quarter of 2025, a decrease of $109 million, or 7%, compared with $1.486 billion in the third quarter of 2024.

In North America, Construction sales increased due to higher sales volume, partially offset by unfavorable price realization. Higher sales volume was mainly driven by higher sales of equipment to end users.

The Wall Street Journal reported that Caterpillar’s engine business was its “standout performer.” The paper reported that Cat’s 31% increase in sales of power generators was “mostly to AI data-center developers and pushed up third-quarter engine-segment sales and profit by 17% from a year earlier.” 

Resources Segment

Resource Industries’ total sales were $3.110 billion in the third quarter of 2025, an increase of $62 million, or 2%, compared with $3.048 billion in the third quarter of 2024. The increase was primarily due to higher sales volume of $138 million, partially offset by unfavorable price realization of $61 million. The increase in sales volume was mainly driven by higher sales of equipment to end users. Resource Industries’ segment profit was $499 million in the third quarter of 2025, a decrease of $120 million, or 19%, compared with $619 million in the third quarter of 2024.

Energy & Transportation Segment

Energy & Transportation’s total sales were $8.397 billion in the third quarter of 2025, an increase of $1.210 billion, or 17%, compared with $7.187 billion in the third quarter of 2024. The increase was primarily due to higher sales volume of $870 million and higher inter-segment sales of $156 million.