Tariffs will cost Caterpillar $200 million, so it's going to raise its prices

[Suppressed]

Tariffs will cost Caterpillar $200 million, so it's going to raise its prices

•Caterpillar says it expects recently imposed tariffs to shave off $100 million to $200 million from its bottom line in the second half of the year.

•It says it intends to largely offset these impacts in part through price increases.

Fred Imbert   | @foimbert
Published 10 Hours Ago  Updated 1 Hour Ago

Big exporter Caterpillar gave a figure on how much tariffs will affect its bottom line.

In its second-quarter earnings statement, the Dow Jones Industrial Average member said Monday it expects recently imposed tariffs to shave off $100 million to $200 million from its bottom line in the second half of the year. The company also raised its full-year earnings forecast despite the increased costs.

Caterpillar's announcement comes after the U.S. slapped tariffs on $34 billion of Chinese goods earlier this month. The U.S. has also implemented tariffs on steel and aluminum imports from Mexico, Canada and the European Union. They have retaliated against those levies with tariffs of their own.

[...]

https://www.cnbc.com/2018/07/30/caterpillar-says-tariffs-will-cost-company-up-to-200-million-in-secon.html

[Wingnut]

Fake news media slant to fit the anti trump narrative.




Caterpillar Profit Surges, Absorbs Tariff-Related Cost Increases
Second-quarter profit more than doubled, topping analysts’ expectations

https://www.wsj.com/articles/caterpillar-profit-surges-absorbs-tariff-related-costs-1532954278

Caterpillar In Pole Position For Earnings Parade, With Fed, Payrolls Later This Week

https://www.forbes.com/sites/jjkinahan/2018/07/30/caterpillar-in-pole-position-for-earnings-parade-with-fed-payrolls-later-this-week/#6db3ab62163f

[Suppressed]

Fake news media slant to fit the anti trump narrative.

That doesn't address the downstream cost. 

[Wingnut]

That doesn't address the downstream cost.

Cat does not appear to be worried.  Good enough for me.   

[IsailedawayfromFR]

That doesn't address the downstream cost.

exactly what is a 'downstream cost'?

[Suppressed]

exactly what is a 'downstream cost'?

Costs to consumers of their product, and, by extension, their customers/clients.

[Frank Cannon]

Isn't this the same Catapillar that has doubled their stock price since Donny took office? Oh yeah. They like it better back then....

[Concerned]

Fake news media slant to fit the anti trump narrative.




Caterpillar Profit Surges, Absorbs Tariff-Related Cost Increases
Second-quarter profit more than doubled, topping analysts’ expectations

https://www.wsj.com/articles/caterpillar-profit-surges-absorbs-tariff-related-costs-1532954278

Caterpillar In Pole Position For Earnings Parade, With Fed, Payrolls Later This Week

https://www.forbes.com/sites/jjkinahan/2018/07/30/caterpillar-in-pole-position-for-earnings-parade-with-fed-payrolls-later-this-week/#6db3ab62163f

Caterpillar announced the intended price increase in their own press release:

Recently imposed tariffs are expected to impact material costs in the second half of the year by approximately $100 million to $200 million, and the company expects supply chain challenges to continue to pressure freight costs. However, the company intends to largely offset these impacts through announced mid-year price increases and using the Operating & Execution Model to further drive operational excellence and structural cost discipline.

https://www.caterpillar.com/en/news/corporate-press-releases/h/caterpillar-second-quarter-2018-results.html

[IsailedawayfromFR]

Costs to consumers of their product, and, by extension, their customers/clients.

If Caterpillar is doing what it is charged by its shareholder owners to do, it is supposed to maximize money to its bottomline.

How does these downstream costs impact Caterpillar as it accomplishes that goal and grows its value?

[thackney]

If Caterpillar is doing what it is charged by its shareholder owners to do, it is supposed to maximize money to its bottomline.

How does these downstream costs impact Caterpillar as it accomplishes that goal and grows its value?

Is rising cost and expense of product for US producers going to grow or shrink their market share in the global market?

[Concerned]

If Caterpillar is doing what it is charged by its shareholder owners to do, it is supposed to maximize money to its bottomline.

How does these downstream costs impact Caterpillar as it accomplishes that goal and grows its value?

Of course, Caterpillar is trying to do what’s in the best interest of their shareholders by raising prices to offset the impact of the tariffs (and increasing freight costs), but those price increases get passed onto Caterpillar customers which ultimately flow down to consumers.  Further, eventually, those price increases will price some customers out of the market for Caterpillar products, driving them to competitors.  That will hurt shareholder value.   

Without the tariffs (and increased freight costs), Caterpillar could maintain their profits (and ultimately their shareholder value) without increasing prices.  Tariffs are a tax that ultimately get paid by consumers.  That’s the bottom line for me.

[Suppressed]

How does these downstream costs impact Caterpillar as it accomplishes that goal and grows its value?

Don't keep your view so narrow by just looking at effects on Caterpillar.

[IsailedawayfromFR]

Is rising cost and expense of product for US producers going to grow or shrink their market share in the global market?

Rising cost and expenses by themselves will never determine what market share they command.

They both have an effect, however.

Caterpillar is benefiting handsomely by the decreased tax rates as well as the rising construction activity from a healthy domestic economy.  This is reflected in their enormous growth in share price during the past couple of years.

[IsailedawayfromFR]

Don't keep your view so narrow by just looking at effects on Caterpillar.

Why? This is a thread specifically started by you on Caterpillar.

Have you seen its huge increase in share prices of the past couple of years?

[ABX]

Costs to consumers of their product, and, by extension, their customers/clients.

You have to break some eggs to make a MAGA omelet. So what if some farmers and blue collar workers have to pay more. They are making America great again and should be glad to sacrifice. Increased costs due to taxes (tariffs) are just the price for living in a civilized society.

[thackney]

Rising cost and expenses by themselves will never determine what market share they command.

They both have an effect, however.

Caterpillar is benefiting handsomely by the decreased tax rates as well as the rising construction activity from a healthy domestic economy.  This is reflected in their enormous growth in share price during the past couple of years.

The majority of Caterpillar business is outside the US.  Competing with others internationally is going to be more difficult with the tariffs.

[IsailedawayfromFR]

The majority of Caterpillar business is outside the US.  Competing with others internationally is going to be more difficult with the tariffs.

Do you see that in the effect on share prices lately?  They seem to be doing fine, and most investors are pretty smart in who they pick in investments.

[IsailedawayfromFR]

Caterpillar is doing fantastic.  Record profits, margins, raising dividends, etc.

Here latest financials.

https://caterpillar.gcs-web.com/static-files/053337ea-6322-44b1-a680-0a2e3c2832e6