Deere & Company (NYSE:DE) shares tumbled on Wednesday after the agricultural equipment giant posted fourth-quarter results and issued a worse-than-expected fiscal 2026 outlook.
Details
The heavy machinery maker reported earnings per share of $3.93, beating the consensus of $3.88.
It reported an 11% year-over-year (Y/Y) increase in quarterly sales to $12.39 billion, beating the consensus of $9.85 billion.
“This past year brought its share of challenges and uncertainty, but thanks to the structural improvements we’ve made and the diverse customer segments and geographies we serve, we were able to achieve our best results yet for this point in the cycle,” said John May, chairman and CEO of John Deere.
Segment Performance
Production and precision agriculture sales rose 10% Y/Y for the quarter to $4.74 billion, led by higher shipment volumes and favorable price realization.
Operating profit in the segment dipped 8% Y/Y to $604 million, primarily due to higher production costs and higher tariffs.
Small agriculture and turf sales increased 7% Y/Y to $2.46 billion on higher shipment volumes.
Operating profit in the segment tumbled 89% Y/Y to $25 million due to higher tariffs, warranty expenses, and production costs.
Construction and forestry sales grew 27% Y/Y to $3.38 billion, led by higher shipment volumes.
Operating profit in the segment increased 6% Y/Y to $348 million, aided by higher shipment volumes.
Deere’s financial services reported a net income increasing 69% Y/Y to $293 million, driven by a lower provision for credit losses and favorable financing spreads, among others.
Management Commentary
May commented, “Looking ahead, we believe 2026 will mark the bottom of the large ag cycle. While ongoing margin pressures from tariffs and persistent challenges in the large ag sector remain, our commitment to inventory management and cost control, coupled with expected growth in small agriculture & turf and construction & forestry, positions us to effectively manage the business and seize emerging opportunities as market conditions begin to recover.”
Outlook
Deere expects fiscal 2026 net income of $4.0 billion to $4.75 billion, implying a year-over-year decline of 20% to 5.5%, and projects operating cash flow of $4.0 billion to $5.0 billion.
For fiscal 2026, Deere expects production and precision agriculture sales to fall 5% to 10%, while small agriculture and turf revenue, as well as construction and forestry sales, are each projected to rise by about 10%.
Industrywide, Deere anticipates U.S. and Canada large agriculture equipment sales to decline 15% to 20% in fiscal 2026. Small agriculture and turf equipment demand is expected to be flat to up 5%, and construction equipment sales in the U.S. and Canada are forecast to be flat to up 5%.
Price Action: DE shares were trading lower by 4.71% to $474.65 premarket at last check Wednesday.
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