Despite hitting the century mark with record-breaking sales, Caterpillar discovered that even the world’s biggest construction equipment maker can’t bulldoze its way past tariffs.
Caterpillar proved that record revenues mean little when tariffs eat into profits faster than a hydraulic excavator through soft earth.
The heavy machinery giant rolled to all-time high revenues of $67.6 billion in 2025, climbing 4% from the previous year’s $64.8 billion. Fourth-quarter sales jumped an impressive 18% to reach $19.1 billion, powered by $3.4 billion in higher equipment sales across all categories.
Construction Industries led the charge with a 15% sales increase to $6.9 billion, while Resource Industries grew 13% and Power and Energy surged 23% in the final quarter.
But here’s where the story takes a turn. While revenues celebrated record heights, profits took a nosedive. Full-year operating profit tumbled 16% to $11.2 billion, and fourth-quarter profit dropped 9% to $2.7 billion.
The culprit? Tariffs squeezed margins like a hydraulic press, creating unfavorable manufacturing costs that offset those impressive sales gains.
Construction Industries felt the pinch particularly hard. Despite strong sales, profit fell 12% to $1.0 billion as margins compressed from 19.6% to 14.9%.
Resource Industries suffered even more, with profits plunging 24% for the full year. The operating profit margin slipped to 16.5% in the fourth quarter compared to 20.2% the year before.
Financial Products added $3.63 billion in revenues, up 4% annually, though fourth-quarter profit dropped dramatically by 61% to $139 million.
Services revenue reached $24 billion with ambitious plans to hit $30 billion by 2030, supported by new tools like the Cat AI Assistant.
Caterpillar maintained adjusted profit per share at $19.06 for the full year, down 13% but still within target ranges. Looking ahead, the company expects tariffs to hit profits by approximately $800 million per quarter in 2026, with total tariff impact estimated at $2.6 billion for the year.
Net income actually rose 11% in the fourth quarter to $2.6 billion, showing resilience amid the tariff headwinds. The company also pledged $25 million to workforce development focused on advanced industrial technology supporting infrastructure for the digital economy.
The company’s centennial year proved that strong demand and disciplined execution can drive record sales, but tariffs remain a formidable obstacle that even Cat-sized equipment struggles to move. A recent analysis found that 50-70% of tariff costs are passed on to consumers, contributing to broader inflationary pressures.
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