Caterpillar Inc. (NYSE:CAT) saw its stock fall 2.3% on Tuesday after the company reported second-quarter 2025 earnings that came in below analyst expectations, as increased manufacturing costs tied to tariffs weighed on profitability. This came despite stronger-than-expected revenue figures.
The company posted adjusted earnings of $4.72 per share for the quarter, missing the analyst consensus of $4.90. Revenue reached $16.6 billion, slightly ahead of the projected $16.27 billion, but down 1% from the $16.7 billion recorded in the same period 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.”
Caterpillar’s operating profit margin declined to 17.3% from 20.9% a year ago, while its adjusted operating profit margin dropped to 17.6% from 22.4%. The company pointed to unfavorable manufacturing costs, driven in large part by increased tariffs, as the primary factor behind the margin contraction.
In terms of performance by business unit, Construction Industries saw revenue decline 7% year-over-year to $6.19 billion, with segment profit plunging 29% to $1.24 billion. Resource Industries also posted a 4% sales decline to $3.09 billion and a 25% drop in segment profit. In contrast, Energy & Transportation stood out with a 7% increase in revenue to $7.84 billion and a 4% gain in segment profit, totaling $1.59 billion.
During the quarter, Caterpillar generated $3.1 billion in enterprise operating cash flow. The company returned $1.5 billion to shareholders, including $800 million in share repurchases and $700 million in dividend payments. It ended the quarter with $5.4 billion in enterprise cash on hand.
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