Deere & Company (NYSE:DE) reported higher second-quarter sales and maintained its full-year profit outlook, as strength in construction equipment and Small Ag & Turf helped offset continued weakness in large agriculture markets.
On the company’s earnings call, Director of Investor Relations Chris Seibert said Deere delivered year-over-year net sales growth of 5% and an equipment operations margin of 16.9%, reflecting “solid execution and a strong, diversified portfolio of businesses spanning multiple industries and geographies.”
For the quarter, Deere reported net sales and revenues of $13.369 billion, up 5% from the prior year. Equipment operations net sales rose 5% to $11.778 billion. Net income attributable to Deere & Company was $1.773 billion, or $6.55 per diluted share.
The company maintained its fiscal 2026 net income forecast of $4.5 billion to $5 billion. Deere also continues to expect equipment operations cash flow of $4.5 billion to $5.5 billion. Its effective tax rate guidance is now 24% to 26%.
Tariff Refunds Boost Quarterly Margins
A notable item in the quarter was a $272 million recovery tied to refund claims related to IEPA tariffs. Josh Beal, Deere’s director of investor relations, said the refund benefited production costs and lifted margins by nearly 2.5 percentage points in the quarter.
Beal said Deere’s direct tariff exposure remains approximately $1.2 billion on a full-year basis, or about a 3 percentage point margin headwind. Net of the refunds, the company’s forecast includes about $900 million of tariff costs for the year.
Chief Financial Officer Brent Norwood said Deere has not introduced tariff surcharges for customers and is instead focused on mitigation efforts including resourcing, reshoring, exemption submissions and USMCA compliance. Norwood said Deere’s implied net price realization for equipment operations is between 1.5% and 2% for the year, in line with general inflation excluding tariffs.
Norwood also highlighted Deere’s domestic manufacturing footprint, saying about 80% of John Deere’s U.S. complete goods sales are produced at U.S. facilities, and roughly 75% of components used at those facilities are sourced from U.S.-based suppliers.
Segment Results Show Diverging Cycles
Deere’s Production and Precision Agriculture segment remained under pressure. Net sales fell 14% year over year to $4.503 billion, primarily due to lower shipment volumes, partially offset by favorable currency translation. Operating profit was $706 million, resulting in a 15.7% operating margin.
Small Ag & Turf posted stronger results, with net sales rising 16% to $3.485 billion, driven by higher shipment volumes and favorable currency translation. Operating profit rose to $719 million, and the segment delivered a 20.6% operating margin.
Construction & Forestry was the strongest growth segment in the quarter. Net sales increased 29% to $3.79 billion, supported by higher shipment volumes and favorable currency translation. Operating profit rose to $561 million, producing a 14.8% operating margin.
Norwood said Deere’s business segments are at different points in the cycle, with large agriculture operating below trough levels, Small Ag & Turf progressing toward mid-cycle and Construction & Forestry slightly above mid-cycle. Despite that, he said Deere is delivering double-digit margins across all segments and expects to grow its top line by more than 5% this year.
Market Outlook: Construction Strength Offsets Ag Weakness
Deere continues to expect large agriculture equipment industry sales in the U.S. and Canada to decline 15% to 20%, citing elevated input costs and ongoing global market uncertainty. However, Seibert said robust commodity demand, potential tightening supply and U.S. government programs are providing some support for farmers.
The company lowered its South America outlook, now expecting tractor and combine industry sales to decline about 15%. Beal said the change reflects incremental softness in Brazil, where high interest rates, higher input costs and a stronger Brazilian real are pressuring grower profitability. He said the situation in Iran is affecting Brazilian growers at a sensitive point as they prepare to plant a new crop in September.
In the U.S. and Canada, Deere expects Small Ag & Turf industry demand to range from flat to up 5%. The company also expects European agricultural equipment demand to be flat to up 5%, while industry sales in Asia are projected to be roughly flat year over year.
Construction demand remains robust, Norwood said, supported by infrastructure spending, rental activity and accelerating data center investments. Deere now expects Construction & Forestry net sales to rise approximately 20% for the full year, and it increased the segment’s operating margin forecast to 10% to 12%.
Norwood said Deere’s U.S. and Canada construction order book has increased more than 60% since November and is at its highest level since April 2024, with more than 80% of production slots filled for the year.
Inventory Progress and Technology Investment
Deere said it has continued to make progress managing inventories in large agriculture. Beal said new inventory levels for North American high-horsepower tractors and combines are down more than 50% from their mid-2024 peak, with inventory-to-sales ratios in line with historical averages.
Used inventories have also improved. Beal said North American used combine inventories are down by the mid-teens from their March 2024 peak, while used high-horsepower tractor inventories are also down by the mid-teens from the cycle peak. Used sprayer inventories are down approximately 30%, and planter inventories are down roughly 50% from recent peak levels.
Deere also emphasized ongoing investment in precision agriculture and new products. Beal highlighted new 8R and 8RX tractor models, ExactDepth and FurrowVision planting technologies, and expanded See & Spray capabilities for crops including wheat, barley and canola.
Beal said Deere has sold more than 12,500 JDLink Boost kits since launching its Starlink-supported satellite connectivity solution in the second half of 2024, with 25% growth in the latest quarter. He also said monthly active digital users have reached nearly 440,000.
Norwood said Deere returned $635 million to shareholders during the quarter through share repurchases and dividends. He said the company remains focused on disciplined capital allocation while continuing to invest through the cycle in products and technologies intended to help customers reduce inputs and improve productivity.
About Deere & Company (NYSE:DE)
Deere & Company, commonly known by its brand John Deere, is a global manufacturer of agricultural, construction and forestry machinery, as well as turf care equipment and power systems. Founded in 1837 by blacksmith John Deere—who developed a polished steel plow to improve tillage in tough prairie soils—the company is headquartered in Moline, Illinois, and has grown into one of the largest and most recognizable names in equipment manufacturing worldwide.
The company's principal businesses include a broad portfolio of agricultural equipment such as tractors, combines, planters, sprayers, harvesters and tillage implements, complemented by precision agriculture technologies and telematics that support farm management, yield optimization and equipment connectivity.
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