Tariffs Drive Up Costs: Caterpillar (CAT.US) Q2 Profit Misses Expectations
It has been learned by Zhijian Financial APP that, before the market closed on Tuesday, Caterpillar (CAT.US) released its second-quarter profit report, which fell short of expectations due to tariff costs and a slight decrease in product prices eroding the profit margins of its iconic yellow excavators and bulldozers.
The financial report shows that Caterpillar's second-quarter revenue was $16.6 billion, down 1% year-over-year, but exceeding market expectations; adjusted earnings per share were $4.72, lower than last year's $5.99 and below market expectations of $4.88.
The financial report indicates that the US trade policy has had a continuous impact on Caterpillar's industry. Tariffs have driven up the company's production costs, harming profits, although sales remain relatively stable. The net impact of tariffs in the second quarter was at the upper end of the estimated range of $2.5 billion to $3.5 billion revealed by the company in April.
Caterpillar's performance is seen as a barometer for the global economic health status. Its construction and resource sectors have experienced declines, while its energy and transportation sectors have shown growth.
Caterpillar expects to face net new tariff costs of approximately $1.3 billion to $1.5 billion this year, with Q2 facing high tariff costs of up to $500 million. Taking into account the impact of tariffs, the company currently expects its adjusted operating profit rate for the full year to be in the lower half of its annual guidance range.
Caterpillar CEO Joe Creed stated in a statement: "Thanks to the growing demand for infrastructure construction and energy, our order volumes remain strong across all business segments, and demand remains stable." Creed took over as CEO from Jim Umpleby in May.
As of the time of writing, Caterpillar's stock was up 0.6%. The stock has risen 21% this year so far.