Caterpillar saw rising revenue, especially in North America, in its construction segment's fourth quarter while also contending with $1 billion in tariff costs.
Tariff costs are expected to reach $2.6 billion this year, the company says.
Fourth-quarter sales and revenue were $19.1 billion, up 18% year-over-year. The company’s full 2025 fiscal year sales and revenue were also up, rising 4% year-over-year.
Caterpillar attributed the full-year increase to a $3.4 billion rise in sales volume, though this was hampered by a roughly $800 million loss from price realization (the net difference between a machine’s listed price and the actual selling price).
For its fourth-quarter consolidated results, Caterpillar saw a $2.7 billion increase in sales volumes. Construction revenue in the fourth quarter was up 15% year-over-year to just over $6.9 billion, and construction sales volume rose by $903 million.
Caterpillar’s North American construction revenue saw the strongest year-over-year growth by region in the fourth quarter, jumping 32% year-over-year to $3.9 billion.
Caterpillar’s Power & Energy segment continues to outpace its construction industries business, reporting a 23% revenue increase in the fourth quarter to $7.7 billion. In North America, Caterpillar’s Power & Energy revenue rose 30% to $4.6 billion. The segment includes generators and engines for powering data centers, which have seen explosive growth in recent years.
Operating profit was down for Caterpillar’s construction business in the fourth quarter by 12% to $1 billion but rose 25% for its Power & Energy business to $1.8 billion.
Tariffs continue to impact Caterpillar’s bottom line. The company reported $1 billion in rising manufacturing costs in its fourth quarter alone, driven primarily by higher tariffs. Caterpillar’s construction segment saw a $420 million negative impact in higher manufacturing costs in the fourth quarter, contributing heavily to that segment’s operating profit loss in the quarter.
Looking at its 2026 fiscal year, Caterpillar forecasts full-year sales and revenue growth will be closer to the top end of its 5% to 7% compound annual growth rate target.
During the earnings call, Vice President of Investor Relations Alex Kapper said construction equipment sales are expected to grow in 2026 and the company’s outlook for North America “remains positive, as sales to users [should] grow moderately versus last year, with construction spending remaining healthy due to IIJA (federal Infrastructure and Investment Jobs Act) funding and other critical infrastructure programs.”
Caterpillar is also expecting around $2.6 billion in incremental tariff costs in 2026.
