Latest news with #JoeCreed
West Australian
5 days ago
- Business
- West Australian
Caterpillar sees US tariff hit of up to $US15b this year
Caterpillar has given investors annual guidance for the first time on how much tariffs will impact the maker of iconic yellow diggers and bulldozers this year, as the Trump administration's trade war deepens. The heavy-equipment maker said Tuesday after reporting earnings that it expects to face net incremental tariffs of $US1.3 billion to $US1.5 billion ($23.1b) this year — including as much as $US500 million in its third quarter — though its new CEO said the company will be able to offset the impact. Caterpillar's outlook is important because it is one of the world's biggest makers of machinery for mining and construction. The US manufacturer's second-quarter results already reflect the effect of tariffs, with costs coming in at the top end of its estimated range disclosed in April. 'We're going to mitigate the impact of tariffs,' chief executive Joe Creed, who succeeded Jim Umpleby in May, said on an earnings call. 'Exactly which levers we're going to pull, we're looking for a little more clarity before we reach into those.' Shares of Caterpillar, which had proved resilient this year with a 20 per cent gain, fell 1.2 per cent as of 10.44am in New York. Caterpillar said it now expects full-year adjusted operating profit to fall in the bottom of its annual target range, even with higher annual sales. Baird analysts calculated that tariffs will equate to a 300 basis point drag on margins, up from its previous expectation of 200 basis points, according to a note to clients after the earnings release. The tariff outlook came after Caterpillar posted adjusted earnings of $US4.72 a share in the second quarter, falling short of the $US4.88 median estimate of analysts polled by Bloomberg. The Irving, Texas-based company said total sales slipped in both construction and resource industries in the quarter, while its energy and transportation unit had higher sales. Operating profit for its machinery, energy and transportation segments fell 24 per cent from the year-earlier period mainly due to unfavorable manufacturing costs largely reflecting the impact of the higher duties. Bloomberg
Reuters
6 days ago
- Business
- Reuters
Caterpillar warns of $1.5 billion hit as tariffs to hurt profit more in second half
Aug 5 (Reuters) - Caterpillar (CAT.N), opens new tab posted weaker-than-expected quarterly profit and warned U.S. tariffs could pose significant headwinds in the second half and cost the construction and mining equipment maker up to $1.5 billion in 2025. Sweeping tariffs on U.S. imports have impacted companies across sectors, prompting many to rejig their supply chains and localize production. "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," CEO Joe Creed said. Shares of Caterpillar, often viewed as bellwether for the industrial economy, fell 1% in early trading, after it also flagged a tariff impact of $400 million to $500 million in the third quarter. 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 excavators and backhoe loaders. 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.
Yahoo
6 days ago
- 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
Yahoo
6 days ago
- Business
- Yahoo
Caterpillar falls as higher tariffs result in earnings miss
-- Caterpillar Inc. shares dropped 2.3% after the heavy equipment manufacturer reported second-quarter 2025 adjusted earnings that fell short of analyst expectations, despite posting better-than-expected revenue. The construction and mining equipment giant reported adjusted earnings of $4.72 per share for the second quarter of 2025, falling short of analyst estimates of $4.90. Revenue came in at $16.6 billion, slightly above the consensus estimate of $16.27 billion but down 1% from $16.7 billion in the same quarter last year. "The Caterpillar team remained focused on customer success and demonstrated solid operational performance this quarter," said CEO Joe Creed. "We continued to see strong orders across our segments as demand remains resilient supported by infrastructure spending and growing energy needs." The company's operating profit margin declined to 17.3% from 20.9% in the year-ago period, while adjusted operating profit margin fell to 17.6% from 22.4%. Caterpillar attributed the decrease in profits primarily to unfavorable manufacturing costs, largely reflecting the impact of higher tariffs. By segment, Construction Industries sales fell 7% YoY to $6.19 billion, with segment profit dropping 29% to $1.24 billion. Resource Industries sales decreased 4% to $3.09 billion, with segment profit down 25%. Energy & Transportation was the bright spot, with sales increasing 7% to $7.84 billion and segment profit rising 4% to $1.59 billion. During the quarter, Caterpillar generated $3.1 billion in enterprise operating cash flow and returned $1.5 billion to shareholders through $0.8 billion in share repurchases and $0.7 billion in dividends. The company ended the quarter with $5.4 billion in enterprise cash. Related articles Caterpillar falls as higher tariffs result in earnings miss Clients buying into summer rally, bracing for later pullback, says BofA's Hartnett Apollo economist warns: AI bubble now bigger than 1990s tech mania 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
6 days ago
- Business
- Yahoo
Caterpillar (NYSE:CAT) Exceeds Q2 Expectations
Construction equipment company Caterpillar (NYSE:CAT) reported revenue ahead of Wall Street's expectations in Q2 CY2025, but sales were flat year on year at $16.57 billion. Its non-GAAP profit of $4.72 per share was 3.7% below analysts' consensus estimates. Is now the time to buy Caterpillar? Find out in our full research report. Caterpillar (CAT) Q2 CY2025 Highlights: Revenue: $16.57 billion vs analyst estimates of $16.38 billion (flat year on year, 1.2% beat) Adjusted EPS: $4.72 vs analyst expectations of $4.90 (3.7% miss) Adjusted EBITDA: $3.37 billion vs analyst estimates of $3.50 billion (20.3% margin, 3.7% miss) Operating Margin: 17.3%, down from 20.9% in the same quarter last year Free Cash Flow Margin: 15.7%, similar to the same quarter last year Market Capitalization: $204 billion "The Caterpillar team remained focused on customer success and demonstrated solid operational performance this quarter," said CEO Joe Creed. Company Overview With its iconic yellow machinery working on construction sites, Caterpillar (NYSE:CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services. Revenue Growth Examining a company's long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Caterpillar's 6.3% annualized revenue growth over the last five years was mediocre. This was below our standard for the industrials sector and is a rough starting point for our analysis. We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Caterpillar's performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.3% annually. Caterpillar isn't alone in its struggles as the Construction Machinery industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time. This quarter, Caterpillar's $16.57 billion of revenue was flat year on year but beat Wall Street's estimates by 1.2%. Looking ahead, sell-side analysts expect revenue to grow 2% over the next 12 months. Although this projection implies its newer products and services will catalyze better top-line performance, it is still below average for the sector. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Operating Margin Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It's also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes. Caterpillar has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.5%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it's a show of well-managed operations if they're high when gross margins are low. Analyzing the trend in its profitability, Caterpillar's operating margin rose by 5.2 percentage points over the last five years, as its sales growth gave it operating leverage. This quarter, Caterpillar generated an operating margin profit margin of 17.3%, down 3.6 percentage points year on year. Since Caterpillar's operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased. Earnings Per Share We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth is profitable. Caterpillar's EPS grew at an astounding 19.5% compounded annual growth rate over the last five years, higher than its 6.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded. We can take a deeper look into Caterpillar's earnings to better understand the drivers of its performance. As we mentioned earlier, Caterpillar's operating margin declined this quarter but expanded by 5.2 percentage points over the last five years. Its share count also shrank by 13.4%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth. Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business. For Caterpillar, its two-year annual EPS growth of 2.7% was lower than its five-year trend. We hope its growth can accelerate in the future. In Q2, Caterpillar reported adjusted EPS at $4.72, down from $5.99 in the same quarter last year. This print missed analysts' estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Caterpillar's full-year EPS of $19.28 to grow 3.1%. Key Takeaways from Caterpillar's Q2 Results It was good to see Caterpillar narrowly top analysts' revenue expectations this quarter. On the other hand, its EPS missed and its EBITDA fell short of Wall Street's estimates. Overall, this was a softer quarter. The stock traded down 3.1% to $420.48 immediately after reporting. Caterpillar underperformed this quarter, but does that create an opportunity to invest right now? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. 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