Summary
Deere & Company (DE) reported its first quarter results for fiscal year 2026, showing a mixed financial performance. Net sales and revenues increased by 13% year-over-year to $9.61 billion, driven by higher sales volumes and positive foreign currency translation effects. However, net income attributable to Deere & Company declined by approximately 25% to $656 million, resulting in diluted earnings per share of $2.42, down from $3.19 in the prior year's quarter. The decrease in profitability was primarily attributed to significant incremental tariffs amounting to $361 million (pretax) and favorable discrete tax items in the prior year's quarter that boosted its comparative results. While equipment operations saw increased sales across most segments, the company continues to navigate a challenging agricultural market characterized by subdued demand in large agriculture equipment and pressure on farmer margins in certain regions. The company also faces ongoing legal scrutiny regarding antitrust allegations. Despite the profit dip, Deere & Company maintains a strong liquidity position with substantial unused credit lines and significant cash, cash equivalents, and marketable securities. The company reiterated its commitment to its Smart Industrial Operating Model and Leap Ambitions, focusing on technological integration and customer value. Management expects overall net sales to increase in fiscal year 2026 compared to 2025, driven by improvements in the Small Agriculture & Turf and Construction & Forestry segments, which are anticipated to offset the predicted decline in Production & Precision Agriculture sales.
Key Highlights
- 1Net sales and revenues increased 13% to $9.61 billion, primarily due to higher sales volumes and favorable foreign currency translation.
- 2Net income attributable to Deere & Company decreased 25% to $656 million, with diluted EPS falling to $2.42 from $3.19 year-over-year.
- 3Incremental tariffs significantly impacted profitability, amounting to $361 million (pretax) for the quarter.
- 4Production & Precision Agriculture (PPA) segment sales increased due to foreign currency effects, but operating profit declined due to higher tariffs, unfavorable sales mix, and increased warranty expenses.
- 5Small Agriculture & Turf (SAT) and Construction & Forestry (CF) segments showed robust sales growth (24% and 34% respectively) and improved operating profits, driven by higher shipment volumes and price realization.
- 6Financial Services segment revenue decreased 5%, mainly due to the deconsolidation of Banco John Deere S.A. and a lower average portfolio balance, but net income increased 6% due to favorable financing spreads.
- 7The company maintained a strong liquidity position with $8.2 billion in cash, cash equivalents, and marketable securities and $7.2 billion in unused credit lines.