Deere & Co is reporting a lower third-quarter profit and is tightening its annual profit forecast as U.S. tariffs dent margins on its farm equipment, sending the company’s shares down 6%.
The gloomy earnings report for the maker of John Deere tractors came Thursday, Aug. 14, as President Donald Trump’s tariffs add to the woes of farm-equipment makers who were already grappling with slow demand due to a slump in prices for wheat, corn and soybeans. Farmers are opting to rent machinery instead of buying.
“Tariff uncertainty and deflated commodity prices have made farmers increasingly cautious in spending decisions and more hesitant to accept higher machinery prices,” said CFRA Research analyst Jonathan Sakraida.
Despite the weak demand, Deere CEO John May said the company was able to manage its inventory levels to help production match retail demand.
The company’s cost-saving measures — which have included 1,985 layoffs at its Iowa plants and facilities, including in Ankeny, Davenport, Dubuque, Johnston, Ottumwa and Waterloo, since June 2024 — also helped it top analyst estimates for third-quarter profit and revenue.
Deere peer CNH Industrial, which is considering closing its 350-worker Burlington factory, where the backhoe originated, also topped second-quarter earnings estimates earlier this month, but warned that its annual sales could drop below last year’s levels.
Deere’s year-over-year profit from ag, construction divisions cut in half
Third-quarter operating profit from two of Deere’s largest units, which produce tractors, combines and construction equipment, were roughly half that from a year earlier.
The company cut the higher end of its annual profit forecast to $5.25 billion from $5.5 billion, but kept the lower end intact at $4.75 billion.
In May, Deere said it expected tariffs to cost over $500 million in 2025 before taxes, and that it was prepared to invest $20 billion in the U.S. over the next decade.
Global companies that reported between July 16 and Aug. 8 projected a combined financial hit of $13.6 billion to $15.2 billion for the full year, a Reuters’ tariff tracker shows.
Trump has said the tariffs are a response to persistent U.S. trade imbalances and declining manufacturing power, and that the moves will bring jobs and investment to the nation.
Deere’s net income in the third quarter came in at $1.29 billion, or $4.75 per share, compared with $1.73 billion, or $6.29 per share, a year earlier.
Analysts on average had expected the company to report a quarterly profit of $4.63 per share, according to data compiled by LSEG.
The company’s net sales fell about 9% to $10.36 billion from a year ago, more than analysts’ estimates of $10.31 billion.
This article originally appeared on Des Moines Register: John Deere sees profits cut due to uncertainty from tariffs
Reporting by Reuters / Des Moines Register
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