Caterpillar misses Q1 estimates, pre-blames tariffs for hit to annual sales

Caterpillar on Wednesday reported a lower-than-expected first-quarter profit on weak construction equipment demand and outlined two scenarios for its annual sales outlook, one of which included the potential impact of extensive tariffs.

The industrial giant gave investors two different scenarios for its annual forecast, in a sign of how difficult it was for companies to plan around US President Donald Trump's strategic tariff policies.

Shares of Caterpillar rose 1.5 per cent in premarket trading, after the company forecast an improvement over its prior expectations under a scenario that excluded tariff impact.

Including tariffs, Caterpillar said it expects annual sales and revenue to be slightly down from 2024, but in line with its prior expectations.

The company said it expects an additional tariff-related cost headwind of between $250 million and $350 million in its second quarter.

Caterpillar had benefited from former President Joe Biden's 2021 infrastructure law, a $1 trillion spending package that boosted demand for construction equipment.

But that momentum has started to slow as project starts ease and private sector investment shows some hesitancy amid higher interest rates.

High borrowing costs and persistent inflation have pressured dealers to realign their inventory levels to match demand, while weakness in China's property sector has hindered infrastructure spend and hurt Caterpillar's sales in the region.

Quarterly revenue in the Asia Pacific region fell 12 per cent to $2.4 billion. The company does not provide a country-specific breakup for revenue.

While quarterly sales fell across all segments from a year ago, revenue from Caterpillar's unit that serves oil, gas, and marine customers edged up on price hikes, making it the company's largest segment.

Quarterly adjusted profit per share fell to $4.25 compared with analysts' average estimate of $4.35, according to data compiled by LSEG.

Its first-quarter sales and revenue fell about 10 per cent to $14.2 billion, missing expectations of $14.66 billion.

(Reporting by Nathan Gomes in Bengaluru; Editing by Arun Koyyur)