Key insights
- Deere's second-quarter profit declined due to weak demand for large farm machinery, a trend expected to persist given projected drops in U.S. net farm income and ongoing cost pressures from tariffs. While smaller equipment and construction segments showed improvement, the core large equipment business is struggling, indicating potential headwinds for related industrial and agricultural sectors. This suggests a cautious outlook for companies reliant on farmer spending.
May 21 (Reuters) - Farm equipment maker Deere posted a lower second-quarter profit on Thursday, weighed down by sluggish demand for its large farm machinery.
Net income fell to $1.77 billion, or $6.55 per share, for the quarter ended May 3, from $1.8 billion, or $6.64 per share, a year earlier.
Tractor makers like Deere have been hamstrung by muted demand for new farm equipment over the last few years, as weak crop prices and rising costs have led farmers to extend use of their machinery.
U.S. net farm income, a broad gauge of the farm economy’s profitability, is expected to drop 0.7% in 2026, according to the country’s Department of Agriculture.
Companies were also hurt by U.S. President Donald Trump’s tariffs on imports that raised production costs for a sector that had long relied on a global supply chain.
Deere, the world’s largest farm equipment manufacturer, posted quarterly revenue of $13.37 billion, up 5% from a year earlier. The growth was led by led by improved demand in its Small Agriculture and Construction segments.
Sales in its largest segment – Production & Precision Agriculture – dropped 14% amid weak demand for heavy equipment such as combine harvesters.
Shares of the company were up 1.5% in premarket trading.
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