Deere & Company reported results for the first quarter of fiscal 2026, showing higher revenue but lower profit as the agricultural equipment cycle remains weak. Strength in construction and small agriculture segments helped offset softness in large farming equipment demand.
The company also raised its full-year profit outlook, signaling confidence that the industry may be nearing a cyclical bottom.
Revenue grows despite industry headwinds
For the quarter ended February 1, 2026, Deere reported:
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Net sales and revenues: $9.61 billion, up 13% year over year
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Equipment net sales: $8.00 billion, compared with $6.81 billion last year
Growth was driven mainly by stronger shipments and demand in construction and small agriculture equipment, along with favorable currency effects.
Profit declines year over year
Despite higher revenue, profitability declined due to tariffs, costs, and a weaker mix in large agriculture equipment:
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Net income (GAAP): $656 million, down from $869 million last year
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EPS (GAAP): $2.42, compared with $3.19 a year earlier
Operating profit was pressured by higher production costs, tariffs, and warranty expenses in some segments.
Segment performance shows mixed trends
Performance varied across Deere’s business lines:
Production & Precision Agriculture
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Sales: $3.16 billion (+3%)
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Operating profit: down sharply due to tariffs and unfavorable sales mix
Small Agriculture & Turf
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Sales: $2.17 billion (+24%)
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Operating profit: up 58% on higher shipment volumes and pricing
Construction & Forestry
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Sales: $2.67 billion (+34%)
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Operating profit: more than doubled due to strong demand and production efficiencies
Financial Services
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Net income: $244 million (+6%)
The results highlight a shift in growth toward construction and smaller equipment categories.
Management commentary: signs of recovery
CEO John May said demand trends are improving outside the large agriculture segment.
The company is encouraged by recovery in construction and small agriculture demand and believes 2026 could mark the bottom of the current cycle, providing a foundation for future growth.
Management also emphasized continued investment in research and development to support new products and technology across its portfolio.
Outlook: full-year profit guidance raised
Deere increased its fiscal 2026 outlook:
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Expected net income: $4.5 billion to $5.0 billion
Industry expectations for 2026 include:
Agriculture & Turf
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Large agriculture: down 15–20%
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Small agriculture & turf: flat to up 5%
Construction & Forestry
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Construction equipment: up ~5%
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Compact construction: up ~5%
The company expects growth in construction-related markets to partially offset weakness in large farming equipment.
Bottom line
Deere’s Q1 FY2026 results reflect a business navigating a cyclical downturn in large agriculture while benefiting from strength in construction and smaller equipment markets. Although profits declined year over year, rising revenue and an improved outlook suggest conditions may be stabilizing as the company moves through the cycle.
To view the company’s previous earnings and latest concall transcripts, click here to visit the Alphastreet news channel.