After back-to-back declining quarters, Caterpillar’s construction business was in the black for the third quarter of 2025, reporting an increase in sales despite being hit by nearly $600 million in tariffs during the three months.
Global construction sales and revenue was up 7% year-over-year in the third quarter to $6.8 billion, driven by a $568 million increase in sales volume. That increase offset a $262 million drop in price realization (the net difference between equipment's listed price and the actual selling price).
In North America, construction sales and revenue rose 8% to $3.9 billion. North American construction equipment retail sales in the third quarter were also up 11% year-over-year, driven by growth in residential and nonresidential construction.
Third-quarter global construction profit, however, saw a 7% year-over-year dip to $1.4 billion. Caterpillar attributed this profit decline in part to lower price realization and unfavorable manufacturing costs of $174 million driven by tariffs.
The energy and transportation segment, which includes engines and turbines and recently became Cat’s largest revenue stream, saw a 17% revenue rise in the third quarter to $8.4 billion. North American revenue rose 26% to $4.1 billion.
Total sales and revenue for all Caterpillar’s segments for the third quarter were up 10% to $17.6 billion, mostly attributed to higher sales volumes and higher equipment sales. Year-to-date total revenue for the first nine months of the year was relatively unchanged at $48.5 billion.
Looking ahead, Caterpillar forecasts full year 2025 revenue will be “modestly higher” year-over-year, even when accounting for 2025 net incremental tariffs of around $1.6 billion to $1.75 billion. Caterpillar estimates its fourth-quarter net incremental tariffs alone will come in at $650 million to $800 million, with 55% expected to be incurred by the company’s construction equipment business.
Construction equipment dealer inventories are also forecast to decline slightly in the fourth quarter compared to the $1.6 billion decrease Cat reported in its 2024 fourth quarter.
