Dive Brief:
- Caterpillar sales reached a all-time high of $17.6 billion during the third quarter, 10% more than last year, despite the tariffs that weigh on the company’s three major segments.
- The results were higher than the company expected, driven by higher sales volumes in its construction, resources and energy and transportation segments, CEO Joseph Creed said on the company’s earnings call on Wednesday. They were partially offset by unfavorable prices for the machines, the Texas-based company noted.
- The equipment maker faced stronger-than-expected headwinds from the tariffs, including a quarterly hit near the high end of its $500 million to $600 million guidance from the previous quarteraccording to their presentation slides. Caterpillar posted an operating profit of $3.1 billion for the period, down 3% from last year.
Diving knowledge:
Sales at Caterpillar and other companies have increased in part because of increased demand for infrastructure to build data centers that support cloud computing and generative artificial intelligence.
The heavy equipment maker’s power and transportation segment, which is responsible for building engines, turbines and power generators, saw third-quarter sales reach $8.4 billion, up 17 percent from last year. Caterpillar’s construction and resource industries segments also saw sales increase 7% and 2%, respectively, during the same period. However, the only segment of the company with year-over-year profit growth was energy and transportation.
“We remain close to our largest data center customers and receive regular feedback on their long-term demand expectations,” Creed said.
Caterpillar also saw its order book increase by $2.4 billion in the quarter, largely driven by its data center customers. The backlog is now $39.8 billion, another all-time high, according to the company.
“What we have going for us is to work and build a lot of momentum,” Creed said.
Looking ahead, Caterpillar raised its full-year guidance from the previous quarter, expecting sales and revenue to be “modestly” higher compared to “slightly” higher than last year, according to its report. earnings presentation. The company’s fourth-quarter sales are also expected to be stronger than last year, with profitability weighed down by the tariffs.
Caterpillar expects the tariffs to have a full-year impact of $1.6 billion to $1.75 billion, excluding mitigation and cost actions. This is in line with the company revised tariff estimates published on August 28. Chief Financial Officer Andrew Bonfield said it also influences the Trump administration 25% rates. on imports of medium- and heavy-duty trucks and truck parts, will take effect on November 1.
Creed said the company has been taking a measured and “no regrets” approach to tariffs, including relatively minor supply changes, cost reductions and certifying more products to comply with the US-Mexico-Canada deal, rather than making hasty investment decisions.
“We will use everything in our toolkit when the time is right to react to tariffs or to mitigate tariffs,” Creed said. “But I’m sure we’ll manage it in time.”
