01—Abstract
Summary
Summary of the 10-Q filed May 29, 2025. Cited figures are marked; the original filing is the authoritative source.
Deere & Company's second-quarter fiscal 2025 results (quarter ended April 27, 2025) show a sharp earnings decline driven by lower equipment sales volumes.
Net sales and revenues fell 16% to $12.8 billiona for the quarter and 22% to $21.3 billion for the six months. Net income attributable to Deere fell 24% to $1.80 billion for the quarter (diluted EPS $6.64, versus $8.53) and 35% to $2.67 billion year-to-date (diluted EPS $9.82, versus $14.74). Management attributes the decline mainly to lower shipment volumes in Production & Precision Agriculture and Construction & Forestry, higher interest rates and used inventory levels, unfavorable currency effects, and rising overhead and tariff costs.
Operating profit fell 26%b in the quarter, with Construction & Forestry down 43% and PPA down 30%, while Small Agriculture & Turf was roughly flat and Financial Services was stable. Credit quality is a watch item. The allowance for credit losses rose on higher expected losses in agriculture and turf retail accounts, reflecting elevated delinquencies and weaker market conditions.
Equipment operations' cash flow from operations was $1.05 billionc for the first six months, down from $3.03 billion, and total consolidated operating cash flow was $568 million, down from $944 million. Management expects lower operating cash flows from equipment operations for 2025. Cash returned to shareholders was $1.68 billion year-to-date, funded partly by higher external borrowings.
Deconsolidation of Banco John Deere, after a 50%d stake sale to Bradesco in February 2025, reduced financing receivables and borrowings. Management guides to lower agriculture and turf and construction sales volumes for the remainder of 2025.
It cites tariffs (about $95 million of direct incremental cost in the quarter) and a pending FTC and state antitrust lawsuit over right-to-repair practices, whose outcome cannot yet be predicted. The company maintains strong credit ratings (A/A1/A+) and declared a quarterly dividend of $1.62 per share.
02—Key points
Key Highlights
- Net sales and revenues fell 16% year over year to $12.76 billion in Q2 2025, and 22% to $21.27 billion for the six months, driven mainly by lower equipment shipment volumes.
- Net income attributable to Deere declined 24% to $1.80 billion in Q2 (diluted EPS $6.64 vs. $8.53), and 35% to $2.67 billion year-to-date (diluted EPS $9.82 vs. $14.74).
- Construction & Forestry operating profit fell 43% in Q2 (margin 12.9%), and PPA operating profit fell 30% (margin 22.0%). Small Ag & Turf was roughly flat (margin 19.2%).
- Credit loss provisions rose and the allowance for credit losses increased on elevated agriculture and turf delinquencies. Management cites higher interest rates and weaker market conditions.
- Consolidated operating cash flow fell to $568 million for the first six months (vs. $944 million), while $1.68 billion was returned to shareholders through buybacks and dividends, partly funded by $5.16 billion of new borrowings.
- Direct incremental tariff costs were approximately $95 million in Q2, and management expects lower 2025 sales volumes in agriculture and turf and construction.
- The FTC and multiple state attorneys general antitrust lawsuit over right-to-repair remains pending. The company's motion to dismiss is awaiting a hearing, and the outcome is not yet predictable.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed May 29, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $12.76B$15.23B | −16.2% |
| R&D Expenses | $549.00M$565.00M | −2.8% |
| SG&A Expenses | $1.20B$1.26B | −5.4% |
| Operating Expenses | $10.43B$12.12B | −14.0% |
| Interest Expense | $784.00M$836.00M | −6.2% |
| Net Income | $1.80B$2.37B | −23.9% |
| EPS (Basic) | $6.65$8.56 | −22.3% |
| EPS (Diluted) | $6.64$8.53 | −22.2% |
| Shares Outstanding (Basic) | 271.10M276.80M | −2.1% |
| Shares Outstanding (Diluted) | 271.80M277.90M | −2.2% |
05—Questions
Frequently Asked Questions
Why did Deere's earnings decline so sharply in the second quarter of fiscal 2025?
The decline was driven mainly by lower sales volumes across Production & Precision Agriculture and Construction & Forestry. Higher interest rates, elevated used equipment inventory, and economic uncertainty reduced customer demand. Unfavorable foreign currency effects and higher overhead costs from production inefficiencies also weighed on margins, partly offset by lower material costs and reduced employee profit-sharing.
Is Deere's credit portfolio showing signs of stress?
Yes, somewhat. The allowance for credit losses increased in Q2 and the first half of 2025, mainly due to higher expected losses on agriculture and turf retail accounts. Delinquencies and non-performing balances in that segment rose versus prior periods, and management cited a weaker market. Financial Services net income was roughly flat in Q2 and up 6% year-to-date, supported by lower operating expenses and a reduced valuation allowance tied to the BJD deal.
How is Deere managing tariffs and the outlook for the rest of 2025?
Management estimates direct incremental tariff costs of about $95 million in Q2 2025, excluding supplier and demand effects, and says it is taking steps to limit the impact. It expects agriculture and turf and construction sales volumes to stay below 2024 levels for the remainder of the year, with lower large ag demand in North America and softer construction demand in the U.S. and Canada. Operating cash flow from equipment operations is also expected to be lower in 2025.
What are the main legal risks disclosed in the filing?
The most significant risk is the FTC and state attorneys general lawsuit alleging monopolization and unfair competition over restrictions on equipment repair tools and resources. Plaintiffs seek a permanent injunction that would allow owners and independent repair providers access to repair tools. Deere filed a motion to dismiss in March 2025, and the FTC responded in April. A related consolidated class action is also pending. Management says it cannot predict the outcome or financial impact.
06—Continue