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Deere raises 2026 profit outlook as construction demand offsets farm equipment slump. Deere & Company has raised its full-year profit forecast after stronger construction equipment demand helped the manufacturer deliver its first year-over-year quarterly profit increase in three years, even as the market for large agricultural machinery remains under pressure. Agricultural Equipment The latest results highlight an increasingly important shift inside Deere's business. For years, large tractors, combines and precision agriculture equipment were the clearest drivers of the company's earnings story. In 2026, construction is doing much more of the heavy lifting. Demand tied to U.S. infrastructure investment, industrial construction and the rapid expansion of data centers has pushed Deere's Construction & Forestry business into its fastest-growing major equipment segment. At the same time, farmers remain cautious about committing capital to expensive new machinery, particularly at the upper end of the horsepower and harvesting markets. Deere raises 2026 profit forecast. Deere now expects fiscal 2026 net income of between $4.75 billion and $5 billion, narrowing and lifting the lower end of its previous $4.5 billion to $5 billion forecast. For the latest quarter, Deere reported earnings of $5.10 per share, compared with $4.75 a year earlier. The result also exceeded the approximately $4.70 per share expected by analysts tracked by LSEG. Quarterly revenue increased 6% year over year to about $11 billion, ahead of market expectations of approximately $10.73 billion. The improvement is notable because Deere entered 2026 facing a difficult agricultural equipment cycle. Earlier in the year, the company had already been forecasting substantially stronger performance in construction than in large agriculture. Deere's second-quarter outlook called for fiscal-year Construction & Forestry sales to rise about 20%, while Production & Precision Agriculture sales were expected to decline between 5% and 10%. Construction sales jump 18%. Construction & Forestry net sales increased 18% from a year earlier during the quarter, making the division Deere's clearest growth engine. The strength is being driven by several overlapping investment cycles. Federal and private infrastructure spending continues to support demand for earthmoving and roadbuilding equipment, while data-center construction has added another unusually capital-intensive source of demand. The connection with artificial intelligence is indirect but increasingly important for equipment manufacturers. AI companies and cloud providers require enormous computing capacity, which in turn requires large data centers, electrical infrastructure, access roads, utilities and extensive site preparation. Those projects create demand for excavators, loaders, dozers and other construction machines long before the servers are installed. Deere says customer order backlogs in the construction business now stretch well into fiscal 2027. That is particularly significant because the segment was already accelerating earlier in the year. Deere reported a 34% year-over-year increase in Construction & Forestry sales during its first fiscal quarter of 2026, to $2.67 billion. Large farm equipment still weak. The picture remains considerably softer in Deere's core large-agriculture business. Production & Precision Agriculture quarterly sales declined 6% from a year earlier as farmers remained reluctant to replace high-value tractors, combines and other major equipment. High machinery prices, borrowing costs and weaker farm economics continue to extend replacement cycles. Commodity prices have not improved enough to produce the kind of broad purchasing recovery that normally follows a downturn in large agricultural equipment. CEO John May said Deere continues to believe that 2026 will represent the bottom of the current agricultural equipment cycle. That may prove correct, but reaching the bottom of a cycle does not necessarily mean a rapid rebound will follow. For manufacturers of 8R and 9R tractors, large combines and high-spec precision equipment, the more important question is how quickly farm cash flow improves enough to justify another round of major capital expenditure. Deere itself previously estimated that the U.S. and Canadian large-agriculture equipment market could decline 15% to 20% in fiscal 2026. Small tractor sales improve. Not every part of Deere's agricultural portfolio is moving in the same direction. Small Ag & Turf net sales increased 12% during the quarter. This business includes lower-horsepower tractors and equipment serving livestock operations, property owners, commercial users and other customers who are less directly exposed to the economics driving purchases of $500,000-plus row-crop tractors and combines. Agricultural Equipment Improving beef and dairy prices have also provided more support for livestock producers. The result reinforces an important feature of the current machinery market: weakness is concentrated most heavily in large, capital-intensive agricultural equipment rather than across every tractor category. Tariffs remain a major cost. Deere also benefited from a $110 million tariff refund during the quarter, although tariffs remain a substantial expense for the manufacturer. Chief Financial Officer Brent Norwood said Deere expects approximately $750 million in net tariff costs during fiscal 2026. That figure could increase to roughly $1 billion in fiscal 2027. This makes the current earnings improvement more impressive, but it also creates an important risk for the next fiscal year. Manufacturers can offset part of a tariff increase through pricing, sourcing changes and production adjustments, but agricultural customers already facing weak economics have limited tolerance for additional equipment price inflation. Deere therefore has to balance margin protection against the risk of making new machinery even harder for farmers to justify. Deere's Construction hedge is working. The most important takeaway from these results is not simply that Deere beat earnings expectations. It is that the company's diversification is working exactly when the agricultural machinery cycle is working against it. A manufacturer dependent almost entirely on large tractors and combines would currently have few places to hide. Deere instead has meaningful exposure to construction, roadbuilding, forestry, compact equipment and smaller agricultural machinery. That has given the company a powerful internal hedge. There is also a strategic irony in the current situation. Much of the investor attention surrounding Deere in recent years has focused on agricultural automation, See & Spray, precision farming and autonomous tractors. Yet one of the strongest short-term contributors to earnings is coming from another technology boom entirely: the physical infrastructure required to support artificial intelligence. That does not mean Deere is becoming a construction company rather than an agricultural machinery company. Production agriculture remains central to the brand and to its long-term technology strategy. But the results demonstrate why Deere's construction portfolio matters much more than it sometimes receives credit for. If the agricultural cycle begins recovering in 2027 while construction backlogs remain strong, Deere could eventually have both major businesses moving in the same direction. That would represent a significantly stronger earnings environment than the company faces today. The risk is that construction demand cools before large-ag equipment recovers. For now, however, infrastructure and data-center investment are giving Deere valuable time to wait for farmers' machinery budgets to improve. About John Deere. John Deere is the principal equipment brand of Deere & Company, headquartered in Moline, Illinois. The business traces its history to 1837, when blacksmith John Deere developed his first commercially successful steel plow in Grand Detour, Illinois. Deere operates across agricultural machinery, construction and forestry equipment, turf equipment, power systems, precision technology and financial services. In fiscal 2025, Deere reported approximately $45.68 billion in consolidated net sales and revenues, including about $38.92 billion in equipment net sales. The company maintains a particularly large U.S. manufacturing footprint. Deere says it currently employs approximately 30,000 people across more than 60 U.S. factory and office locations in more than 16 states. It has also announced plans for more than $1 billion in U.S. excavator design and manufacturing investment over the next decade, including approximately $800 million in research and development and $300 million in capital investment through 2030. Discover more Company News agricultural equipment Manufacturing

Deere reports $1.38 billion quarterly profit as farm equipment market faces pressure. Deere's third-quarter net income rose 7% to $1.379 billion, but Production & Precision Agriculture sales fell 6% as demand for large farm machinery remained weak. Published August 20, 2026 · 1:12 PM ET Deere & Company reported net income of $1.379 billion for its fiscal third quarter ended August 2, 2026, up 7% from $1.289 billion a year earlier. Diluted earnings per share rose to $5.10 from $4.75, while worldwide net sales and revenues increased 5% to $12.608 billion. The stronger quarter did not erase the pressure in Deere's biggest agricultural machinery business. Production & Precision Agriculture net sales fell 6% to $3.998 billion, and operating profit in the segment declined 9% to $527 million. Deere said lower shipment volumes weighed on the division, partly offset by favorable pricing and foreign-currency effects. In its third-quarter earnings materials, Deere raised the lower end of its fiscal 2026 net-income forecast to $4.75 billion from $4.5 billion, while keeping the upper end at $5.0 billion. Management also repeated its view that 2026 will mark the bottom of the current agricultural equipment cycle, a forecast it tied to early order trends, improving used-equipment inventories and greater adoption of its technology. Large farm equipment remains the weak point. Deere's own industry outlook shows why the company is still cautious about the large-equipment market. It expects unit sales of large agricultural equipment in the United States and Canada to fall 15% to 20% in fiscal 2026. The same decline is forecast for tractors and combines in South America, while European agricultural equipment demand is expected to be flat. By contrast, the U.S. and Canadian small agriculture and turf market is forecast to range from flat to up 5%. The latest retail-sales indicators in Deere's presentation point to particularly weak demand for some of the most expensive machines. On a rolling three-month basis through July, U.S. and Canadian industry sales of four-wheel-drive tractors were down 34%, combine sales were down 20%, and sales of two-wheel-drive tractors above 100 PTO horsepower were down 7%. Deere's dealer inventories of larger two-wheel-drive tractors were equivalent to 33% of trailing 12-month retail sales, compared with 31% a year earlier, while combine inventories edged down to 25% from 26%. The broader U.S. farm-income picture is mixed rather than uniformly weak. The U.S. Department of Agriculture's 2026 farm-sector forecast puts net farm income at $153.4 billion, down 0.7% from 2025 in nominal terms and 2.6% after adjusting for inflation. Total farm cash receipts are forecast to decline 2.7% to $514.7 billion, even though crop receipts are expected to rise 1.2% in nominal dollars. Production expenses are forecast to increase 1.0% to $477.7 billion. Those figures help explain why a recovery in farm machinery can lag improvements in selected areas of agricultural income. Large tractors, combines and precision equipment represent major capital purchases, and Deere itself identifies farm income, crop and livestock prices, interest rates, trade conditions and dealer inventories among the factors that shape the agricultural equipment cycle. The company has not said that a broad recovery is already under way. Its current position is narrower: it believes the trough is being reached in 2026 and sees early ordering and used-equipment trends as encouraging signs. Construction and smaller equipment carry more of the quarter. Strength outside large production agriculture provided the main counterweight. Small Agriculture & Turf net sales rose 12% to $3.383 billion, while operating profit increased 28% to $622 million. The segment's operating margin widened to 18.4% from 16.0%. Deere attributed the sales increase to higher shipment volumes and favorable price realization, with stronger volume and mix also supporting profit. Construction & Forestry produced an even larger percentage improvement. Net sales increased 18% to $3.618 billion and operating profit rose 84% to $436 million. The operating margin climbed to 12.1% from 7.7%. Deere said higher shipment volumes and pricing helped sales, while favorable price realization was the main positive factor for operating profit, partly offset by higher selling, administrative, research and development costs. Financial Services also contributed modestly more profit, with quarterly net income rising 7% to $219 million from $205 million. Across the company, total operating profit before reconciling items and income taxes increased 18% to $1.856 billion. The quarter also included $110 million of tariff recoveries, bringing recoveries for the first nine months of fiscal 2026 to $382 million. Deere said the tariff impact for its operating segments is primarily reflected in production costs. The company continues to identify trade-policy uncertainty and tariffs as risks, so the recoveries should not be read as evidence that tariff exposure has disappeared. The stronger performance from construction and smaller equipment has helped Deere absorb part of the large-agriculture downturn. That diversification is visible in the year-to-date numbers as well, although it has not fully closed the gap with last year. Net income for the first nine months of fiscal 2026 was $3.808 billion, down 4% from $3.962 billion in the comparable 2025 period, even as total net sales and revenues rose 7% to $35.589 billion. Guidance improves, but the farm recovery is still a forecast. Deere now expects fiscal 2026 net income of $4.75 billion to $5.0 billion. The revised range lifts the lower end from the $4.5 billion forecast issued after the second quarter. Equipment-operations net cash flow is forecast at $5.0 billion to $5.5 billion, and capital spending is expected to be about $1.3 billion. The segment outlook still shows a sharp split across the portfolio. Deere expects full-year Production & Precision Agriculture net sales to decline about 10%, with an operating margin of 11% to 12%, compared with a 15.4% margin in fiscal 2025. Small Agriculture & Turf sales are forecast to rise about 15%, while Construction & Forestry sales are expected to increase about 20%. That means the improved company-level profit outlook does not depend on a return to strong large-farm-equipment demand before the fiscal year ends. Deere is instead relying on stronger businesses elsewhere in the portfolio, pricing, disciplined production and what management sees as the early stages of stabilization in agricultural equipment. The distinction matters because Deere's statement that 2026 will be the bottom of the cycle is management's outlook, not a confirmed turn in demand. The company still forecasts double-digit declines in large-ag unit sales in its two most important agricultural regions, and recent retail data remain weak for combines and four-wheel-drive tractors. Deere has scheduled its fourth-quarter 2026 earnings call for November 25 at 9:00 a.m. Central Time. That update will provide the next company-wide look at whether the early order trends Deere is citing are translating into firmer demand for large agricultural equipment.