Caterpillar Inc. (CAT) saw its shares plunge over 5% in pre-market trading on Thursday as the heavy machinery giant warned of a slight drop in sales for 2025, citing weak equipment demand driven by high borrowing costs and persistent inflation.

The company reported a 5.32% pre-market plunge, following its fourth-quarter earnings release. Caterpillar's revenue missed Wall Street estimates due to lower sales volumes, particularly in its construction and mining equipment segments.

In its earnings report, Caterpillar cautioned that dealers are scaling back purchases of new machinery to better align with demand trends. The Federal Reserve's cautious pace of interest rate cuts and stubbornly high inflation have compelled dealers to adopt a wait-and-see approach, leading to a decline in equipment orders.

While Caterpillar's adjusted earnings for Q4 beat analyst expectations slightly, benefiting from lower manufacturing costs, the company's sales and revenue fell short of estimates. The energy and transportation segment performed relatively better, but could not offset the declines in construction and mining equipment sales.