Caterpillar is a bellwether for the health of the global economy. (Caterpillar Inc.)
Caterpillar Inc. expects slightly lower sales this year if Trump administration tariffs remain in place and the economy dips into a recession in the second half.
The guidance, in line with previous expectations, came as the heavy-equipment maker posted first-quarter earnings that fell short of analysts’ estimates. The company painted two scenarios in its results’ presentation, forecasting operating profit to be within its annual target range if factoring in tariffs and a recession.
Without levies, profit would be at the top end of that range, with sales little changed from last year, Caterpillar said.
The results at Caterpillar — a bellwether for the health of the global economy — come as businesses around the world navigate the turmoil triggered by the sweeping tariffs threatened by President Donald Trump. That uncertainty has left many executives struggling to forecast what demand may look like through the rest of the year.
Caterpillar said it expects an additional cost headwind of $250 million to $350 million in the second quarter from tariffs, “net of initial mitigation actions and cost controls.”
The company posted adjusted earnings per share of $4.25, missing the $4.32 average estimate of analysts polled by Bloomberg, with the company citing lower sales volume driven mainly by the impact from changes in dealer inventories.
“While the headline EPS/revenue miss look disappointing, the guts of the report/outlook aren’t that bad,” analysts at Vital Knowledge said in a note.
