Deere & Co reported fiscal 2025 fourth‑quarter revenue of $12.39 billion, an 11% year‑over‑year increase that surpassed the consensus estimate of $9.99 billion. The lift was driven by a 10% rise in Production & Precision Agriculture sales to $4.74 billion and a 27% jump in Construction & Forestry sales to $3.38 billion, offsetting a sharp decline in Small Agriculture & Turf revenue. Strong demand in the core segments, combined with a favorable mix shift toward higher‑margin products, enabled the company to maintain pricing power even as input costs rose.
Earnings per share came in at $3.93, a beat of $0.05 against the most widely cited consensus of $3.88 and a miss of $0.03 against the higher estimate of $3.96. The near‑consensus result reflects disciplined cost control and the mix shift toward Construction & Forestry, which has a higher operating margin. However, the company faced higher tariff costs and increased warranty expenses that narrowed margins in the Small Agriculture & Turf segment, preventing a larger EPS gain.
Net income for the quarter was $1.065 billion, down 14% from the same period a year earlier but still above the $1.05 billion consensus estimate. The decline was largely driven by a 89% drop in operating profit in the Small Agriculture & Turf segment, where the operating margin fell to 1% from 10.1% a year ago. In contrast, Production & Precision Agriculture’s operating profit fell 8% year‑over‑year, with its margin contracting to 12.7% from 15.3%, while Construction & Forestry’s operating profit rose 12% and its margin improved to 18% from 16%.
For fiscal 2026, Deere guided net income of $4.0 billion to $4.75 billion, below the consensus estimate of $5.31 billion. Management cited tariff costs exceeding $500 million and ongoing margin pressure in Construction & Forestry as key reasons for the lower guidance. CEO John May noted that the company expects 2026 to mark the bottom of the large‑ag cycle, while emphasizing continued inventory management, cost discipline, and growth opportunities in small agriculture, turf, and construction & forestry.
Investors reacted negatively to the cautious outlook, with the market focusing on the tariff headwinds and the large‑ag downturn. The strong Q4 revenue beat and near‑consensus EPS provided some relief, but the guidance underscored management’s concerns about short‑term profitability.
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