Caterpillar's Q2 Profits Fall as Operational Costs Surge
Caterpillar, the world's leading manufacturer of construction and mining equipment, has reported a mixed bag of results for the second quarter of 2025. While revenue dipped slightly, operational costs surged, leading to a decline in profits and a hit to the company's shares.
Caterpillar's quarterly revenue stood at $16.6 billion, marking a 1 percent decrease year over year. However, this failed to offset rising operational costs, which took a toll on profits. The company's adjusted operating margin fell to 17.6 percent, down from 22.4 percent in the previous year.
The Construction Industries segment was particularly hard hit, with sales declining by 7 percent and segment profit plummeting by nearly 29 percent. The Resource Industries segment also saw a 4 percent decrease in sales and a 25 percent drop in profits. Meanwhile, the Energy and Transportation segment showed resilience, with sales rising 7 percent and profit up 4 percent, driven by demand from power generation and marine customers.
Caterpillar estimates that tariff-related costs will have a full-year impact of between $1.3 billion and $1.5 billion, with up to $500 million expected in the third quarter alone. Despite these challenges, the company maintained solid cash flow and continued shareholder returns through dividends and stock buybacks.
Caterpillar's shares fell roughly 6 percent in pre-market trading following the release of the second-quarter results. The company's adjusted earnings per share also missed analyst projections, falling to $4.72 from $5.99 in 2024. While the reasons for the weakening of Caterpillar's profits in the second quarter of 2025 are not entirely clear, increased operational costs, particularly those driven by new tariffs, appear to be a significant factor.
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