Latest news with #AndrewBonfield
Yahoo
07-08-2025
- Business
- Yahoo
Caterpillar warns of $1.5B tariff hit as machinery prices slide
This story was originally published on Manufacturing Dive. To receive daily news and insights, subscribe to our free daily Manufacturing Dive newsletter. Dive Brief: Caterpillar is bracing for tariff headwinds between $1.3 billion and $1.5 billion for the year despite mitigation and cost control efforts, CFO Andrew Bonfield said during a second quarter earnings call Tuesday. The construction and mining equipment maker saw a nearly $350 million tariff impact in Q2, and is expecting higher trade-related costs in Q3 and Q4, Bonfield said. The Trump administration's country-specific tariffs are set to take effect Aug. 7, barring any extensions. Caterpillar generated total Q2 sales and revenue of $16.6 billion, down 1% from last year. This was driven by declines in the company's construction and mining segments, and buoyed by positive energy and transportation results. Dive Insight: Although affected by tariffs, Caterpillar saw solid demand for its products as lower manufacturing costs offset volume gains in the quarter. The company is seeing robust activity from its power generation business, supported by growing demand for AI data centers. The company's Q2 net profit fell 19% to $2.2 billion from last year. For the construction business, Caterpillar reported unfavorable pricing and lower sales volumes related to dealer inventory changes in North America and Latin America. Meanwhile, sales increased in the Asia Pacific and Europe-Africa-Middle East regions. The construction unit made a Q2 profit of $1.2 billion, down 29% from a year ago. Unfavorable pricing also weighed on Caterpillar's resource industries business, responsible for mining and quarry customers. The segment made a profit of $537 million, down 25% year-over-year. The company cited tariffs, lower sales volumes and unfavorable manufacturing costs as factors in the decline. 'While we have taken initial mitigating actions to reduce the impact, tariff and trade negotiations continue to be fluid,' CEO Joseph Creed said during the call. 'We will remain flexible and we intend to implement longer-term actions once there is sufficient certainty. We are considering all options to further reduce the impact of tariffs going forward.' As heavy machinery sales slipped, Caterpillar had robust order activity in the energy and transportation segment. Power generation, for example, saw quarterly sales grow 19% from a year ago, due to demand for reciprocating engines for data centers, Creed said. 'We continue to stay close to our largest data center customers and receive regular feedback on their long-term demand,' Creed added. The energy and transportation segment posted a Q2 profit of $1.6 billion, up 4% YoY. Caterpillar also saw its financial products segment profit grow 4% to $1 billion over the same period. Looking ahead, Creed said Caterpillar is forecasting Q3 sales to grow moderately versus last year, with higher volumes across all three of the company's major segments. However, tariffs will squeeze profit margins lower than last year, he said. Creed also forecasted full-year sales and revenue to be up slightly over 2024. Caterpillar is implementing a number of quick, easily reversible actions to mitigate the tariffs impact. It's cutting discretionary spending and leaning into limited dual-sourcing where beneficial, Creed said. The company is also working on making more goods compliant under the U.S.-Mexico-Canada Agreement, he added. 'The net impact of tariffs was around the top end of our estimated range for the quarter and is likely to be a more significant headwind to profitability in the second half of 2025,' Creed said. Recommended Reading Caterpillar braces for $350M tariff hit on Q2 sales Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
05-08-2025
- Business
- Yahoo
Caterpillar projects tariffs could cost the company up to $1.5 billion in 2025
Caterpillar's operating profit margin and sales and revenue numbers fell in the second quarter of 2025 amid ongoing uncertainty and global economic changes sparked by President Donald Trump's tariff increases. Caterpillar CFO Andrew Bonfield told investors on a call Tuesday that the net impact of tariffs on Caterpillar this year will be between $1.3 billion and $1.5 billion. The Texas-based manufacturer, which has a heavy presence in the Peoria area, posted a 1% decrease in sales and revenues in Q2 compared to this time last year and a 2.6% decrease in operating profit margin. Profits per share fell to $4.62 in the second quarter compared to $5.48 last year. Adjusted profit shares were $4.72 this quarter, down from $5.99 last year. Caterpillar CEO Joe Creed said these numbers all met or went above Caterpillar's expectations for the quarter but told investors on the call that the impact of tariffs hit the high end of Caterpillar's estimates and the impact of tariffs on their numbers was expected to grow in the second half of the year. More: Why former CEO has 'confidence' Caterpillar will be in Peoria for 'a very long time' The Trump administration has been haphazardly negotiating trade deals with nations around the globe, many of which include increases in tariff rates on goods. They have been subject to change as the administration has changed the terms and numbers of deals as negotiations progress. Creed told investors on Tuesday that Caterpillar has deployed some "initial mitigation" efforts to curb the impact of tariffs but added the company is "considering all options" as they await more "sufficient certainty" on tariffs. In response to an investor question on the call, Creed said that Caterpillar's unique global supply chain has added complexity to the situation but he said Caterpillar is still waiting on more certainty and is still working to fully understand the latest tariff announcement from the government. On July 31, Trump signed an executive order that placed reciprocal tariffs on 70 countries at rates ranging from 15% to 41%. Those tariffs are expected to go into place on Aug. 7. Caterpillar's numbers were also lower in the first quarter of 2025 as tariffs have increased costs on the global manufacturer. In April, Creed told investors on a call that he expected tariffs to have a cost headwind of between $250 million and $350 million in Q2. Bonfield said Tuesday the tariff impact in the third quarter is expected to grow to $400 million to $500 million. Roughly 20% of the tariff impact will be on resource industries and 25% will be on transportation. The decrease in sales and revenues was because of "unfavorable price realization of $414 million," Caterpillar said. Despite the negative impact of tariffs, demand remains high and backlog at Caterpillar continues to grow, signaling positive markers for Caterpillar, Creed and Bonfield told investors on Tuesday. This article originally appeared on Journal Star: Caterpillar earnings fall in second quarter amid Trump tariff hikes
