Caterpillar warns of up to $1.5 billion tariff hit, profit misses on weak demand
Even though the company has been able to offset the impact of supply-chain snarls and cost inflation through price hikes, a slowdown in U.S. construction spending owing to higher interest rates, led to a pullback in demand for its products such as excavators and backhoe loaders.
Shares of Caterpillar, often viewed as bellwether for the industrial economy, fell 1% in premarket trading after it also flagged a tariff impact of $400 million to $500 million in the third quarter.
Sweeping tariffs on U.S. imports have impacted companies across sectors, prompting many to rejig their supply chains and localize production. Caterpillar also flagged unfavorable manufacturing costs largely due to tariffs.
Still, the company expects its annual sales and revenue to be slightly higher than last year and compared to its prior expectations of about flat, in anticipation of demand from its energy and transportation unit.
'We remain constructive on the improving demand backdrop,' Oppenheimer analyst Kristen Owen said in a note.
Including tariffs, the company forecast 2025 adjusted profit margins in the bottom half of its annual target range.
In the current earnings season, companies have reported a combined loss of $12.1 billion to $13.4 billion between July 16 and August 1 for 2025, Reuters' global tariff tracker shows. A majority of these were from the industrial and manufacturing segment.
Trump has said the tariffs are a response to persistent U.S. trade imbalances and declining manufacturing power, and that the moves will bring jobs and investment to the nation.
Quarterly revenue in the Asia Pacific region fell 2% to $2.89 billion. Its North American sales, which accounts for more than half of overall revenue, fell 2% to about $8.9 billion.
Adjusted profit in the second quarter fell to $4.72 per share, compared with estimates of $4.90, according to data compiled by LSEG. Its sales and revenue for the quarter fell 1% to $16.7 billion from a year ago.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
2 hours ago
- Business Recorder
Japan's SoftBank to invest $2bn in Intel
TOKYO: Japan-based tech investor SoftBank Group said Tuesday it will invest $2 billion in Intel, as the US government reportedly considers taking a 10-percent stake in the troubled US chip giant. The move is the latest in SoftBank's succession of investments and business deals in the United States as its charismatic founder Masayoshi Son aggressively courts US President Donald Trump. 'This strategic investment refleRicts our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role,' Son said in a joint press release with Intel announcing the deal. Trump calls on Intel CEO to resign SoftBank will pay $23 per share of Intel common stock. SoftBank's move came as the Trump administration discussed taking a stake of about 10 percent in Intel to boost the chipmaker and the American semiconductor sector, according to US media, including Bloomberg News and the Wall Street Journal. Since Trump returned to power, Son has already announced other investment plans in the United States, including its leading role in the $500-billion Stargate project to build AI infrastructure in the United States along with cloud giant Oracle and ChatGPT-maker OpenAI. Son stood beside the US president and fellow investors to announce the Stargate project at the White House in January. Lip-Bu Tan, Intel chief executive officer, said in the statement the latest deal demonstrates its close ties with SoftBank. It is 'a company that's at the forefront of so many areas of emerging technology and innovation and shares our commitment to advancing US technology and manufacturing leadership,' he said. Trump had pressed Tan, a Malaysian-born tech veteran, to resign 'immediately,' after a Republican senator raised national security concerns over his links to firms in China. But during a meeting last week, Trump praised Tan, saying in a social media post that 'his success and rise is an amazing story.' Trump also wrote that members of his cabinet would work with Tan and come up with 'suggestions'. Intel is one of Silicon Valley's most iconic companies but its fortunes have been dwarfed by Asian powerhouses TSMC and Samsung, which dominate the made-to-order semiconductor business. Sharon Chen, an analyst from Bloomberg Intelligence, described SoftBank's investment as 'small' but said it 'suggests the company could invest more in the semiconductor industry as it seeks to be a key participant in the sector's development'.
Business Recorder
2 hours ago
- Business Recorder
Japan's SoftBank to invest $2b in Intel
TOKYO: Japan-based tech investor SoftBank Group said Tuesday it will invest $2 billion in Intel, as the US government reportedly considers taking a 10-percent stake in the troubled US chip giant. The move is the latest in SoftBank's succession of investments and business deals in the United States as its charismatic founder Masayoshi Son aggressively courts US President Donald Trump. 'This strategic investment refleRicts our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role,' Son said in a joint press release with Intel announcing the deal. Trump calls on Intel CEO to resign SoftBank will pay $23 per share of Intel common stock. SoftBank's move came as the Trump administration discussed taking a stake of about 10 percent in Intel to boost the chipmaker and the American semiconductor sector, according to US media, including Bloomberg News and the Wall Street Journal. Since Trump returned to power, Son has already announced other investment plans in the United States, including its leading role in the $500-billion Stargate project to build AI infrastructure in the United States along with cloud giant Oracle and ChatGPT-maker OpenAI. Son stood beside the US president and fellow investors to announce the Stargate project at the White House in January. Lip-Bu Tan, Intel chief executive officer, said in the statement the latest deal demonstrates its close ties with SoftBank. It is 'a company that's at the forefront of so many areas of emerging technology and innovation and shares our commitment to advancing US technology and manufacturing leadership,' he said. Trump had pressed Tan, a Malaysian-born tech veteran, to resign 'immediately,' after a Republican senator raised national security concerns over his links to firms in China. But during a meeting last week, Trump praised Tan, saying in a social media post that 'his success and rise is an amazing story.' Trump also wrote that members of his cabinet would work with Tan and come up with 'suggestions'. Intel is one of Silicon Valley's most iconic companies but its fortunes have been dwarfed by Asian powerhouses TSMC and Samsung, which dominate the made-to-order semiconductor business. Sharon Chen, an analyst from Bloomberg Intelligence, described SoftBank's investment as 'small' but said it 'suggests the company could invest more in the semiconductor industry as it seeks to be a key participant in the sector's development'.
Business Recorder
2 hours ago
- Business Recorder
India removes import duty on cotton in temporary relief for garment industry
NEW DELHI: India has exempted import duties on cotton from August 19 to September 30, fulfilling the demand of industry groups who said exemptions would help make the sector more competitive. The temporary suspension of the duty, announced in a government order late on Monday, is seen as a relief for India's garment industry, which is reeling from a steep 50% tariff on shipments to the United States. The US tariff comprises an existing 25% levy and an additional 25% set to take effect later this month, imposed as a penalty for India's purchases of Russian oil. The effective rate compares unfavourably with 20% for Bangladesh and Vietnam, and 30% for China. Industry bodies such as the Confederation of Indian Textile Industry (CITI) had urged the government to scrap the cotton import duty to help make the sector more competitive. Before the exemption, cotton imports were subject to an 11% duty. Industry officials now expect the government to extend duty-free cotton imports beyond September. Reuters earlier reported that some Indian exporters were scrambling to explore manufacturing options overseas to offset the impact of the higher tariffs. India's garment sector was already grappling with a labour crunch and limited production capacity. The prospect of exporters relocating production abroad poses a further challenge to the government's 'Make in India' manufacturing drive. India's tax restructuring a 'huge reform', will boost competitiveness, Maruti Suzuki chair says India aims to increase textile exports to $100 billion by 2030. The sharp rise in US tariffs comes just as India was emerging as a strong alternative for American garment buyers, with Bangladesh facing political uncertainty and companies seeking to diversify supply chains beyond China.
