Caterpillar Inc (Cat) warned that United States tariffs would cost it up to US$1.5 billion (A$2.3 billion) in 2025.
The American heavy equipment manufacturer earlier announced an 18% slide in consolidated operating profit to $2.86 billion in the second quarter of the 2025 financial year (Q2 FY25).
This was the result of unfavourable manufacturing costs, mostly due to the impact of higher tariffs and an unfavourable price realisation.
Adjusted earnings per share (EPS) fell 21% to $4.72 on sales and revenue, which eased 1% to $16.6 billion, as the unfavourable price realisation was partially offset by higher sales volumes.
The net impact from incremental tariffs in Q2 was near the top end of its estimated $250 million to $350 million range.
CEO Joe Creed said the company remained focused on customer success and demonstrated a solid operational performance in the quarter.
“We continued to see strong orders across our segments as demand remains resilient supported by infrastructure spending and growing energy needs,” Creed said in a press release.
Caterpillar said FY25 sales and revenues were expected to be slightly higher than in 2024, but tariffs would have a net incremental impact of between $1.3 billion and $1.5 billion in FY25.
The FY25 adjusted operating profit margin would be in the top half of the annual target range if the net impact of incremental tariffs were excluded and in the bottom half if it were included.
"Impact of tariffs was around the top end of our estimated range for the quarter and it's likely to be a more significant headwind to profitability in the second half of 2025," Creed said.
Caterpillar (NYSE: CAT) shares closed 51 cents (0.12%) higher at $434.23 on Tuesday (Wednesday AEST), capitalising the company at $204.22 billion, before rising to $434.92 in after-hours trading.
They have risen 38% over the last 12 months and sit near a record high of $441.15 reached last month.
Founded in 1925 and operating in more than 190 countries, it is one of the world’s largest manufacturers of construction and mining equipment.
