Deere shares drop as net income falls, guidance narrows

[Dnipro. Ukraine 10 July 2021. Two harvesters machine John Deere to harvest wheat field working.]
Dmytro Skrypnykov/iStock Editorial via Getty Images

Deere (NYSE:DE [https://seekingalpha.com/symbol/DE]) shares slid 6.1% in premarket trading Thursday after the farm and construction equipment maker reported weaker quarterly earnings from a year earlier and tightened its full-year profit outlook, even as results topped Wall Street expectations.

The company posted fiscal third-quarter net income of $1.289 billion, or $4.75 a share, down from $1.734 billion, or $6.29 a share, in the same quarter last year. Analysts on average had forecast earnings of $4.59 a share. Revenue fell 9% to $12.02 billion, but still beat the consensus estimate of $10.33 billion.

For the first nine months of fiscal 2025, Deere’s (NYSE:DE [https://seekingalpha.com/symbol/DE]) net income was $3.96 billion, down 32% from the prior-year period, while revenue dropped 18% to $33.29 billion.

Chief Executive John May said Deere (DE [https://seekingalpha.com/symbol/DE]) is managing production in line with retail demand and focusing on reducing excess used equipment in the market. “We’re building a healthier market for everyone — our customers, our dealers and our business — even in these challenging times,” May said in a statement.

The company narrowed its full-year net income forecast to a range of $4.75 billion to $5.25 billion, compared with prior guidance of $4.5 billion to $5.5 billion.

Segment performance was mixed:

* PRODUCTION & PRECISION AGRICULTURE sales fell 16% to $4.27 billion, with operating profit plunging 50% due to lower shipment volumes and unfavorable pricing.
* SMALL AGRICULTURE & TURF sales slipped 1% to $3.03 billion, while operating profit dipped 2% as higher tariffs offset cost reductions.
* CONSTRUCTION & FORESTRY sales declined 5% to $3.06 billion, with operating profit down 47% on weaker pricing and higher tariff-related production costs.

Financial services net income rose 34% to $205 million, helped by lower provisions for credit losses and favorable comparisons with the prior year.

Deere (DE [https://seekingalpha.com/symbol/DE]) expects demand for large agricultural equipment in the U.S. and Canada to fall about 30% this year, with construction equipment sales down about 10% in the same region.

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