It seems as if 2025 might have been the best of years for many companies, across sectors, if it weren't for the headwinds caused by the trade wars
Patrick T. Fallon / AFP via Getty Images
Caterpillar $CAT just posted its best sales year ever, with growth across its major categories — "driven by higher sales of equipment to end users,” the company said. On Thursday, the maker of heavy equipment, machinery, and engines reported full-year revenues clocking in at a record $67.6 billion. Fourth-quarter revenue came in at $19.1 billion, also a record.
“Our centennial year marked a significant milestone, underscored by the highest full-year sales and revenues in Caterpillar’s history,” said CEO Joe Creed, in the release. “These results demonstrate the strength of our end markets and our disciplined execution.”
Even so, profits left something to be desired. Due primarily to the effects of tariffs, operating margins were hard hit. Operating profit came in at $11.2 billion for the year, a 16% decline from 2024, and $2.7 billion for the quarter, a 9% decline over 2024. Profits per share also fell on a sequential and full-year basis.
The company’s construction vehicles unit is a good example of the phenomenon, with sales up 15% even as “unfavorable manufacturing costs” largely reflecting the “impact of higher tariffs” caused profits to fall 12%. It was a similar story in Caterpillar’s mining equipment division: Sales up 13%, profits down 24%. These margin hits were offset by profit growth in financial products and power & energy.
Caterpillar expects similar trends in 2026, forecasting sales and revenue growing by similar rates, with a $2.6 billion estimated tariff hit once again weighing on profits, to the tune of around $800 million per quarter.
Peers and competitors have reported similar issues, with Deere $DE & Company noting the “ongoing margin pressures from tariffs” in its quarterly and annual reports — and a similar pattern of relatively resilient or even strong sales but challenged margins. It really seems as if 2025 might have been the best of years for many companies, across sectors, if it weren’t for the headwinds caused by the trade wars.
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