Caterpillar(US:CAT)2025-08-06 13:35Financial Performance - Total sales and revenues for Q2 2025 were $16.569 billion, a decrease of $120 million, or 1 percent, compared to $16.689 billion in Q2 2024, primarily due to unfavorable price realization of $414 million [183]. - Operating profit margin for Q2 2025 was 17.3 percent, down from 20.9 percent in Q2 2024; adjusted operating profit margin was 17.6 percent compared to 22.4 percent in the prior year [184]. - Profit per share for Q2 2025 was $4.62, down from $5.48 in Q2 2024; adjusted profit per share was $4.72 compared to $5.99 in the same period [184]. - Total sales and revenues for the six months ended June 30, 2025, were $30.818 billion, a decrease of $1.670 billion, or 5 percent, from $32.488 billion for the same period in 2024 [184]. - Operating profit for Q2 2025 was $2.860 billion, down $622 million or 18% from $3.482 billion in Q2 2024, mainly due to unfavorable manufacturing costs [216]. - Operating profit for the six months ended June 30, 2025, was $5.439 billion, a decrease of $1.562 billion, or 22%, compared to $7.001 billion for the same period in 2024 [248]. - The operating profit margin decreased to 17.6% for the six months ended June 30, 2025, from 21.5% for the same period in 2024 [249]. - Profit attributable to common shareholders for the six months ended June 30, 2025, was $4,182 million, compared to $3,825 million in the same period in 2024 [308]. - Profit of consolidated companies was $5,508 million, reflecting an increase of $165 million compared to the previous period [312]. Sales Performance by Segment - Construction Industries' total sales were $6.190 billion in Q2 2025, a decrease of $493 million or 7% compared to Q2 2024 [220]. - Resource Industries' total sales were $3.087 billion in Q2 2025, a decrease of $119 million or 4% compared to Q2 2024 [222]. - Energy & Transportation segment reported a sales increase of 7% to $7.836 billion in Q2 2025 [211]. - Total sales for Energy & Transportation reached $7.836 billion in Q2 2025, an increase of $499 million, or 7%, compared to $7.337 billion in Q2 2024, driven by higher sales volume and favorable price realization [226]. - Energy & Transportation sales increased by $386 million, or 3%, to $14.404 billion for the six months ended June 30, 2025, driven by favorable price realization and increased sales volume [243]. - Construction Industries sales decreased by $1.733 billion, or 13%, to $11.374 billion for the six months ended June 30, 2025, primarily due to lower sales volume and unfavorable price realization [243]. - Resource Industries' total sales were $5.971 billion for the six months ended June 30, 2025, a decrease of $428 million, or 7%, compared to $6.399 billion for the same period in 2024 [257]. Inventory and Backlog - The backlog increased by about $2.5 billion across all three primary segments, indicating strong orders supported by infrastructure spending and growing energy needs [186]. - Total dealer inventory increased by $100 million in Q2 2025, contrasting with a $200 million decrease in Q2 2024 [210]. - Dealer inventory increased by approximately $200 million during the six months ended June 30, 2025, compared to an increase of about $1.2 billion during the same period in 2024 [241]. - The order backlog at the end of Q2 2025 was approximately $37.5 billion, an increase of $2.5 billion from Q1 2025, with $10.3 billion not expected to be filled in the next twelve months [295]. Cost and Expenses - Interest expense excluding Financial Products decreased to $126 million in Q2 2025 from $137 million in Q2 2024, attributed to lower average debt and borrowing rates [225]. - Selling, general and administrative expenses for the six months ended June 30, 2025, were $3,287 million, up from $2,905 million in the same period of 2024 [308]. - Research and development expenses for the six months ended June 30, 2025, were $1,031 million, consistent with the same period in 2024 [308]. - The cost of goods sold for the six months ended June 30, 2025, was $19,772 million, compared to $19,776 million in the same period of 2024 [308]. Future Outlook - For 2025, the company expects slightly higher sales and revenues compared to 2024, with a stronger second half of the year than typical [190]. - The incremental tariff impact for 2025 is expected to be around $1.3 billion to $1.5 billion, net of some mitigating actions and cost controls [192]. - Restructuring costs for 2025 are anticipated to be approximately $300 to $350 million, with capital expenditures around $2.5 billion [193]. - The company expects to fund targeted investments for long-term profitable growth, focusing on expanded offerings, services, and sustainability, including acquisitions [289]. - The company anticipates continued growth in profit and cash flow, with a focus on operational efficiency and market expansion [321]. Risks and Challenges - Caterpillar's financial results are subject to various risks, including global economic conditions and commodity price fluctuations [322]. - The company faces challenges from competitive environments affecting sales and pricing strategies [322]. - Potential impacts from international trade policies, including tariffs, could influence demand for Caterpillar's products [322]. - The Financial Products segment is exposed to risks associated with the financial services industry, including interest rate changes and customer delinquencies [322]. - Significant legal proceedings or government investigations could pose risks to Caterpillar's operations [322]. - The impact of unexpected events, such as global pandemics, remains a critical risk factor for the company [322].