Deere Beats Fiscal Q3 EPS as Sales Fall

Deere & Company (DE 1.50%), a leading manufacturer of agricultural, construction, and forestry equipment, reported results for fiscal Q3 2025 (ended July 27, 2025) on August 14, 2025. The company reported better-than-expected GAAP earnings per share (EPS) of $4.75, topping consensus GAAP estimates of $4.58. However, net sales fell to $10.4 billion, down 9% from the prior year. Total revenue was $12.0 billion, also reflecting a 9% decline. The period was marked by significant year-over-year decreases in profit and sales, especially in larger equipment lines, despite modestly exceeding low expectations. Leadership narrowed its full-year guidance and signaled ongoing challenges, including rising tariffs and economic uncertainty. Overall, the results highlight resilience in critical areas, but also substantial pressures from market and regulatory factors.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in fiscal Q2 2025 earnings report.

Business overview and focus areas

Deere & Company is an American manufacturer specializing in a wide range of equipment for agriculture, construction, and forestry. Its core business revolves around producing tractors, harvesters, loaders, and related machinery, as well as providing digital solutions and financial services to its customers around the world.

The company has recently focused on precision agriculture technologies, integrating advanced automation and data analytics in its machinery. This means adding features like satellite-guided tractors, on-board sensors, and digital connectivity. These solutions aim to boost productivity and sustainability for customers and maintain competitive differentiation. Success for the business depends on innovation, cost management, and navigating regulatory or economic shifts. Its financial services arm supports these goals by offering equipment financing and leasing.

Quarter in review: Financial and operational developments

Net sales and revenues declined by 9% compared to fiscal Q3 2024, largely due to weaker demand in core agricultural equipment. Segment data shows declines in all the main businesses. Net sales for Production & Precision Agriculture dropped 16%, while operating profit in this segment was cut in half. Management attributed this slump to lower shipment volumes and an unfavorable sales mix, pointing to reduced customer demand and inventories left over from periods of uncertainty.

The Small Agriculture & Turf segment, which includes equipment for smaller farms and turf maintenance, was more stable. Net sales slipped just 1%, and operating profit in the Small Agriculture & Turf segment eased 2%. The company credited this resilience to favorable currency translation and price realization, which partly offset lower shipment volumes. The Construction & Forestry segment, supplying machines like excavators and harvesters for construction and timber industries, saw net sales fall 5% and experienced a 47% drop in operating profit. The sharp decline in profitability reflects unfavorable price realization and increased production costs due to higher tariffs.

Financial Services stood out as a strong performer. Net income for this segment increased 34%, benefiting from fewer credit losses and the effects of special items in the prior year. The company also completed a joint venture in Brazil with Banco Bradesco S.A, which is expected to help lower risk and deepen market presence in an important growth country. This financing operation plays a crucial role in supporting equipment sales in uncertain times.

In terms of technology strategy, the company advanced the adoption of key innovations. Orders for its See & Spray technology exceeded 1,000 new units during 2025. Nearly two-thirds of eligible machines for Precision Essentials have renewed so far in 2025. The company is rolling out further autonomous machinery and electric-powered equipment to meet regulatory and customer demands for sustainability.

Another key operational update was progress in managing inventory. Deere reported that new inventory for large tractors is down more than 40% year-over-year as of fiscal Q2 2025, and combines—machines used to harvest crops—are down almost 25% year-over-year as of fiscal Q2 2025. These reductions help balance supply with demand but high levels of late-model used equipment remain, which could pressure both pricing and future sales.

The impairment resulted from slowing external demand for batteries, indicating that future cash flows would likely not cover the carrying value of the assets. In terms of shareholder returns, the quarterly dividend was increased to $1.62 per share, a rise from $1.47 in fiscal Q3 2024.

Forward-looking guidance and investor considerations

Management narrowed its fiscal 2025 net income outlook to $4.75 billion–$5.25 billion, trimming the upper end of the previous range. Financial Services net income is projected to be approximately $770 million for the year.

Deere expects tariffs to continue having a material impact, with $500 million in costs for fiscal 2025 concentrated in the latter half of the year. The company notes there is little room for additional price increases in fiscal 2025, due to nearly full order books and cautious customer behavior. Used equipment inventories, though improving, remain high in certain categories and may affect pricing in future quarters. Management emphasized the importance of ongoing technology adoption and operational efficiency to offset market declines and external cost pressures, but risks and uncertainty persist in the months ahead.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.