Deere & Company

What they do

Deere manufactures and distributes equipment for farming, turf care, construction, and forestry, including tractors, harvesters, cotton pickers, excavators, and roadbuilding equipment. It also provides financial services such as retail notes, revolving charge accounts, wholesale receivables, leases, and extended warranties through John Deere Financial.

Revenue drivers

• Production & Precision Agriculture (PPA) — Sells large equipment for row crops, cotton, and sugarcane; Q2 2026 net sales $4.503 billion, down 14% year-over-year, with operating profit $706 million.
• Small Agriculture & Turf (SAT) — Sells compact tractors, hay and forage equipment, mowers, utility vehicles, and golf course equipment; Q2 2026 net sales $3.485 billion, up 16%, operating profit $719 million.
• Construction & Forestry (CF) — Sells backhoe loaders, dozers, excavators, and timber harvesting equipment; performance not detailed in the provided excerpts but noted as a contributor to strong results.
• Financial Services — Provides financing and leasing for customers, generating income through interest and fees; Q2 2026 results not broken out, but net income is expected to be down in 2026 per outlook.

Recent performance

For Q2 2026 (ended May 3, 2026), Deere reported net income of $1.773 billion, or $6.55 per share, versus $1.804 billion ($6.64) a year ago. Worldwide net sales and revenues rose 5% to $13.369 billion, with net sales of $11.778 billion. For the first six months, net income was $2.429 billion ($8.97 per share), down from $2.673 billion ($9.82), while net sales and revenues increased 8% to $22.981 billion. PPA sales fell 14% due to lower volumes, while SAT sales rose 16% on higher shipments. The company recorded a $272 million recovery related to invalidated IEEPA tariffs.

Strategy

Deere's Smart Industrial Operating Model focuses on three pillars: Production Systems (aligning products around customer production steps), Technology Stack (investments in hardware, software, connectivity, autonomy, and data platforms), and operational excellence. The Leap Ambitions set multi-year goals emphasizing automation, autonomy, digitalization, lifecycle solutions, and Solutions as a Service (SaaS). Management continues to invest in new products and technology through the cycle and leverages its dealer network to drive value. SaaS revenue is not yet a significant percentage of total revenues.

Risks

• Agricultural market cyclicality — Sales depend heavily on farm income, commodity prices, and input costs; downturns reduce equipment demand.
• Global trade policies and tariffs — Import tariffs on materials and retaliatory measures increased production costs, while the Supreme Court invalidated IEEPA tariffs, leading to a $272 million recovery.
• Economic conditions and interest rates — High interest rates and inflation pressure farm profitability and financing ability, especially in South America and Europe.
• Foreign exchange exposure — A stronger Brazilian real and other currency fluctuations can affect competitiveness and demand, though currency translation provided some favorable effects in Q2.

Outlook

For fiscal 2026, Deere forecasts net income of $4.5 to $5.0 billion. Large agriculture sales are expected to decrease in North America and soften in South America, while SAT and CF sales are expected to improve, leading to overall higher net sales. Industry conditions may lead to lower sales volumes, higher sales incentives, and elevated receivable write-offs.