Caterpillar’s Sales Outlook and Market Trends

By Shivansh Tiwary

(Reuters) – Caterpillar warned of a slight sales drop in 2025, as dealers scale back equipment purchases due to weak demand driven by high borrowing costs and persistent inflation, sending its shares down 3.2% on Thursday.

The company, seen as a bellwether for global economic growth, also expects adjusted operating profit margin in the first quarter to be lower than a year ago.

Contractors are adopting a wait-and-see approach to buying new machinery amid growing uncertainty over government spending under the Trump administration.

Finance chief Andrew Bonfield stated that if deregulation efforts boost U.S. economic growth, it would benefit Caterpillar (NYSE:CAT).

Meanwhile, the initial surge in demand from government projects under former President Joe Biden’s 2021 infrastructure law—a $1 trillion initiative to upgrade roads and bridges—has tapered off.

Sales in Caterpillar’s construction industries segment fell nearly 8% to $6 billion, and its resources industries unit decreased by 9% to $2.96 billion.

“Customers continue to display capital discipline, although key commodities remain above investment thresholds,” said CEO Jim Umpleby, emphasizing lower sales expectations for this segment in 2025.

Caterpillar does not provide financial forecasts but shares its expectations.

Higher borrowing costs, the Federal Reserve’s cautious pace of interest-rate cuts, and persistent inflation have also led dealers to reduce purchases to align better with demand trends.

CFRA Research analyst Jonathan Sakraida noted that customers may be opting to rent equipment instead of making direct purchases amid macroeconomic uncertainty, impacting CAT machinery sales.

For the fourth quarter, Caterpillar reported an adjusted profit of $5.14 per share, beating expectations of $5.02, thanks to strong pricing in its energy and transportation segment.

Its sales and revenue for the quarter fell 5% to $16.22 billion, compared to Wall Street expectations of $16.39 billion, according to LSEG data.