Dive Brief:
- Caterpillar’s sales hit an all-time high of $17.6 billion during the third quarter, up 10% from last year, despite tariffs weighing on the company’s three major segments.
- Results came in higher than the company expected, driven by higher sales volumes across its construction, resources and energy and transportation segments, CEO Joseph Creed said on the company’s earnings call Wednesday. They were partially offset by unfavorable pricing for machines, the Texas-based company noted.
- The equipment manufacturer faced stronger-than-expected headwinds from tariffs, including a quarterly impact near the top end of its $500 million to $600 million guidance from the previous quarter, according to its presentation slides. Caterpillar posted an operating profit of $3.1 billion for the period, down 3% from last year.
Dive Insight:
Sales have surged for Caterpillar and other companies in part due to increased demand for infrastructure to build data centers that support cloud computing and generative artificial intelligence.
The heavy equipment maker’s energy and transportation segment — responsible for building engines, turbines and power generators — saw Q3 sales reach $8.4 billion, up 17% over last year. Caterpillar’s construction and resource industries segments also saw sales climb 7% and 2%, respectively, during the same period. However, the company’s only segment with YoY profit growth was energy and transportation.
“We continue to stay close to our largest data center customers and receive regular feedback on their long-term demand expectations,” Creed said.
Caterpillar also saw its backlog of orders grow by $2.4 billion during the quarter, largely driven by its data center customers. The backlog is now at $39.8 billion, another all-time high, according to the company.
“What we have in place is working and generating great momentum,” Creed said.
Looking ahead, Caterpillar raised its full-year guidance from the previous quarter, expecting sales and revenues to be “modestly” higher versus “slightly” higher than last year, according to its earnings presentation. The company’s Q4 sales are also forecasted to be stronger than last year, with profitability weighed down by tariffs.
Caterpillar is anticipating tariffs to have a full-year impact between $1.6 billion and $1.75 billion, excluding mitigation and cost actions. This is in line with the company’s revised tariff estimates released Aug. 28. CFO Andrew Bonfield said it also factors in the Trump administration’s 25% tariffs on imports of medium- and heavy-duty trucks and truck parts, set to take effect Nov. 1.
Creed said the company has been taking a measured, “no regrets” approach to tariffs, including relatively minor sourcing changes, cost reductions and certifying more products to be compliant with the U.S.-Mexico-Canada Agreement, rather than making hasty investment decisions.
“We’ll use everything in our toolkit when the time is right to react to the tariffs or to mitigate the tariffs,” Creed said. “But I’m confident we’ll manage it over time.”
