Caterpillar, a global maker of construction and mining equipment, is readying for tariff headwinds in the near term of up to $350 million.
The company, with a headquarters in Irving, Texas, reported better-than-expected sales to users and record organic growth in its backlog in the first quarter of 2025, Chief Operating Officer and incoming CEO Joe Creed told investors during an earnings call Wednesday. However, he said, the potential impact of tariffs has "increased uncertainty and the situation remains fluid."
Creed said during the earnings call that "for the second quarter, the tariffs which have been announced and implemented this year are currently estimated to be a cost headwind of about $250 million to $350 million. This estimate is net of our initial mitigation efforts and cost controls, which represent limited short-term actions that we were able to implement quickly."
Nearly half of Caterpillar's first-quarter revenue came from outside North America, showing the company is a bellwether when it comes to tariffs impacting global business. The firm is evaluating a range of longer-term mitigation actions as it awaits more clarity around tariffs, so it has yet to share an estimate of the full-year impact.
The company's largest manufacturing base is in the United States, where it employs more than 50,000 full-time employees. Caterpillar continues to be a net exporter with manufacturing locations throughout the world.
The company's revenue fell to $14.3 billion in the first quarter compared with $15.8 billion in the same period the prior year. Caterpillar reported it earned $2 billion for the first three months ending March 31, or $4.20 per share, down from the same quarter the prior year where the company earned $2.86 billion, or $5.75 per share.
Creed is expected to take the reins as CEO of Caterpillar as well as a board seat on Thursday, taking over for James Umpleby, who will become executive chairman of the board.
Caterpillar plans to spend about $2.5 billion in capital expenditure this year. The company also expects to spend $150 million to $200 million of restructuring costs in 2025.