Caterpillar sales topped $14.2 billion in the first quarter, down 10% from the same period a year ago when sales were $15.8 billion. The Texas-based manufacturer cited a drop in sales volume of $1.1 billion for the decline, mainly driven by dealers selling from existing inventory. It also cited lower prices resulting from merchandising incentives to users. Operating profit for the quarter was 18.1%, down 27% compared to Q1 2024, to $2.6 billion
The company said results were slightly better than expected.
Backlog jumped to $5 billion, a record for the company, which it said indicated sell through to users as dealers “replenish” inventory rather than build it up.
Sales in the company’s Construction Industries group declined 19% to $5.2 billion, with $820 million of the $1.2 billion drop attributed to slower sales volume. Sales in North America were down 24%, to $2.9 billion.
How Caterpillar is dealing with tariffs
On its call with analysts, Caterpillar acknowledged the uncertainty of tariffs’ effects on its financials, citing the diversity of its end markets and global manufacturing scale as positives for dealing with the overall effects. Caterpillar is a net exporter of equipment.
Joe Creed, who will take over as CEO on May 1, said the company has implemented short-term cost reductions and “belt-tightening” as well as the slowing of some inbound equipment shipments. He said pricing decisions will be balanced against what it cannot offset by reducing costs.
Jim Umpleby, current CEO, said the company is “optimistic” that the Trump Administration will strike deals with trading partners, especially China, which represents about 50% of the tariffs Caterpillar experiences.
Andrew Bonfield, CFO, said the company is “closely monitoring the evolving economic conditions” and said current tariffs could add between $250 million and $350 million to the company’s costs in the second quarter. He presented two scenarios for how tariffs could affect second-quarter and full-year financial performance.
In a pre-tariff scenario, which does not include any impact from tariffs, Bonfield said sales for the year would be flat compared to fiscal 2024, better than previously expected. Bonfield presented an alternative scenario that assumes current tariffs would continue through the year and no additional mitigation efforts to combat them. In this case, sales would be down slightly for the year, in line with earlier expectations.
“This result highlights the resilience of our top line, which is supported by the strength of our backlog and the diversity of our end markets,” Bonfield said.
Bonfield said the company does not expect a significant decrease in dealer inventory and still expects them to hold inventories flat for the year. “These factors help to underpin our confidence for the second half of the year,” he said.
