Deere's Q3 Profit Plunges 26% Amidst Sales Slump

Ticker: DE · Form: 10-Q · Filed: 2025-08-28T00:00:00.000Z

Sentiment: bearish

Topics: Agricultural Equipment, Construction Machinery, Heavy Equipment, Industrial Sector, Earnings Miss, Revenue Decline, Financial Services

Related Tickers: DE, CAT, CNHI

TL;DR

**Sell DE; demand for heavy machinery is clearly slowing, and this quarter's numbers confirm the downturn.**

AI Summary

Deere & Company reported a significant decline in financial performance for the three and nine months ended July 27, 2025. Net sales and revenues decreased by 8.6% to $12,018 million for the three months, down from $13,152 million in the prior year, and by 18.0% to $33,290 million for the nine months, compared to $40,572 million in 2024. Net income attributable to Deere & Company fell by 25.7% to $1,289 million for the quarter, from $1,734 million, and by 32.4% to $3,962 million year-to-date, from $5,855 million. This decline was primarily driven by reduced net sales across all major product lines, with Production Agriculture sales dropping from $5,038 million to $4,183 million in the quarter. The company also saw a decrease in cash provided by operating activities, from $4,139 million to $3,464 million for the nine-month period. Despite these challenges, the company's total assets remained stable at $107,817 million, and cash and cash equivalents increased to $8,580 million from $7,004 million at July 28, 2024.

Why It Matters

Deere's substantial decline in revenue and net income signals a challenging environment for the agricultural and construction equipment sectors, impacting investor confidence and potentially leading to a re-evaluation of growth prospects. For employees, this could mean slower hiring or even workforce adjustments if the downturn persists. Customers might see more aggressive pricing or new financing incentives as Deere seeks to stimulate demand in a competitive market. The broader market could interpret this as a leading indicator of softening demand in key industrial and agricultural segments, potentially affecting other heavy equipment manufacturers like Caterpillar and CNH Industrial.

Risk Assessment

Risk Level: high — The company experienced a 25.7% decrease in Net Income Attributable to Deere & Company for the three months ended July 27, 2025, falling to $1,289 million from $1,734 million in the prior year. Furthermore, Net Sales and Revenues declined by 8.6% in the quarter, from $13,152 million to $12,018 million, indicating significant operational headwinds and reduced demand across its core segments.

Analyst Insight

Investors should consider reducing their exposure to DE given the significant declines in net sales and net income. Monitor upcoming economic indicators for the agricultural and construction sectors, as a continued slowdown could further depress demand and profitability for Deere & Company.

Financial Highlights

revenue
12,018M
total Assets
107,817M
net Income
1,289M
eps
4.75
cash Position
8,580M
revenue Growth
-8.60%

Revenue Breakdown

SegmentRevenueGrowth
Net sales10,357M-9.05%
Finance and interest income1,426M-2.40%
Other income235M-22.70%
Net sales (YTD)28,338M-20.72%
Finance and interest income (YTD)4,233M0.62%
Other income (YTD)719M-18.39%

Key Numbers

Key Players & Entities

FAQ

What were Deere & Company's net sales and revenues for the third quarter of 2025?

Deere & Company's net sales and revenues for the three months ended July 27, 2025, were $12,018 million, a decrease from $13,152 million in the same period of 2024.

How much net income did Deere & Company attribute to its shareholders in Q3 2025?

Net income attributable to Deere & Company for the third quarter of 2025 was $1,289 million, a significant decline from $1,734 million reported in the third quarter of 2024.

What was the diluted earnings per share (EPS) for Deere & Company in the third quarter of 2025?

Deere & Company reported a diluted earnings per share of $4.75 for the three months ended July 27, 2025, which is lower than the $6.29 reported for the same period in 2024.

How did Production and Precision Agriculture (PPA) sales perform for Deere & Company in Q3 2025?

Sales for the Production and Precision Agriculture (PPA) segment were $4,384 million for the three months ended July 27, 2025, down from $5,242 million in the prior year's third quarter.

What is Deere & Company's maximum exposure to loss from Banco John Deere S.A.?

Deere & Company's maximum exposure to loss from Banco John Deere S.A. was $1,064 million as of July 27, 2025, which includes receivables from and investments in the VIE, plus guarantees.

What were the total assets for Deere & Company as of July 27, 2025?

As of July 27, 2025, Deere & Company reported total assets of $107,817 million, which is comparable to $107,841 million at July 28, 2024.

How much cash did Deere & Company generate from operating activities for the nine months ended July 27, 2025?

For the nine months ended July 27, 2025, Deere & Company generated $3,464 million in net cash from operating activities, a decrease from $4,139 million in the same period of 2024.

What new accounting pronouncements did Deere & Company adopt in 2025?

Deere & Company adopted ASU 2023-05 on Business Combinations – Joint Venture Formations and ASU 2022-03 on Fair Value Measurement in 2025, neither of which had a material effect on their consolidated financial statements.

What is the outlook for Deere & Company's financial reporting regarding new FASB ASUs?

Deere & Company will adopt ASU 2025-05 (Credit Losses) in fiscal year 2027, ASU 2024-03 (Expense Disaggregation) in fiscal year 2028, and ASU 2023-09 (Income Tax Disclosures) in fiscal year 2026, and is currently assessing their effects.

What was the change in Deere & Company's cash and cash equivalents from July 2024 to July 2025?

Deere & Company's cash and cash equivalents increased to $8,580 million at July 27, 2025, from $7,004 million at July 28, 2024, representing a positive change of $1,576 million.

Industry Context

Deere & Company operates in the highly competitive agricultural and construction equipment industry. The sector is influenced by global economic conditions, commodity prices, farmer income, and technological advancements. Competitors include CNH Industrial, AGCO, and Caterpillar, among others. Recent trends show a demand for precision agriculture technology and sustainable farming solutions.

Regulatory Implications

Deere is subject to various regulations concerning environmental standards, emissions, safety, and financial reporting. Changes in trade policies and tariffs can also impact its global supply chain and sales. Compliance with these regulations is crucial for maintaining market access and avoiding penalties.

What Investors Should Do

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Key Dates

Glossary

Net Sales and Revenues
The total income generated from the sale of goods and services, including related financing income. (Key top-line metric indicating the company's sales performance.)
Net Income Attributable to Deere & Company
The portion of the company's profit that belongs to its shareholders after all expenses and noncontrolling interests are accounted for. (Measures the company's profitability for its owners.)
Diluted EPS
Earnings per share calculated by dividing net income by the weighted-average number of diluted common shares outstanding. (Indicates the profitability on a per-share basis, considering potential dilution from stock options and other convertible securities.)
Cash and cash equivalents
Highly liquid investments with maturities of three months or less from the date of purchase. (Represents the most liquid assets available to the company for immediate operational needs and investments.)
Noncontrolling interests
The portion of equity in a subsidiary that is not attributable to the parent company. (Affects the net income and comprehensive income attributable to the parent company.)
Equity in income of unconsolidated affiliates
The company's share of profits or losses from investments in companies where it does not have control. (Contributes to the overall net income but is reported separately from consolidated operations.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, Deere & Company has experienced a notable downturn. Total net sales and revenues for the three months ended July 27, 2025, decreased by 8.6% to $12,018 million, and for the nine months, they fell by 18.0% to $33,290 million. Net income attributable to Deere & Company saw a steeper decline, down 25.7% to $1,289 million for the quarter and 32.4% to $3,962 million year-to-date. This performance deterioration is accompanied by a decrease in net cash provided by operating activities, although the company's cash position has strengthened.

Filing Stats: 4,692 words · 19 min read · ~16 pages · Grade level 20 · Accepted 2025-08-28 11:39:17

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

Item 1. FINANCIAL STATEMENTS DEERE & COMPANY STATEMENTS OF CONSOLIDATED INCOME For the Three and Nine Months Ended July 27, 2025 and July 28, 2024 (In millions of dollars and shares except per share amounts) Unaudited Three Months Ended Nine Months Ended 2025 2024 2025 2024 Net Sales and Revenues Net sales $ 10,357 $ 11,387 $ 28,338 $ 35,484 Finance and interest income 1,426 1,461 4,233 4,207 Other income 235 304 719 881 Total 12,018 13,152 33,290 40,572 Costs and Expenses Cost of sales 7,570 7,848 20,215 24,205 Research and development expenses 556 567 1,631 1,664 Selling, administrative and general expenses 1,217 1,278 3,387 3,608 Interest expense 794 840 2,408 2,478 Other operating expenses 281 264 817 930 Total 10,418 10,797 28,458 32,885 Income of Consolidated Group before Income Taxes 1,600 2,355 4,832 7,687 Provision for income taxes 339 625 905 1,845 Income of Consolidated Group 1,261 1,730 3,927 5,842 Equity in income of unconsolidated affiliates 10 1 11 4 Net Income 1,271 1,731 3,938 5,846 Less: Net loss attributable to noncontrolling interests ( 18 ) ( 3 ) ( 24 ) ( 9 ) Net Income Attributable to Deere & Company $ 1,289 $ 1,734 $ 3,962 $ 5,855 Per Share Data Basic $ 4.76 $ 6.32 $ 14.61 $ 21.13 Diluted 4.75 6.29 14.57 21.04 Dividends declared 1.62 1.47 4.86 4.41 Dividends paid 1.62 1.47 4.71 4.29 Average Shares Outstanding Basic 270.7 274.5 271.1 277.1 Diluted 271.4 275.6 271.9 278.2 See Condensed Notes to Interim Consolidated Financial Statements. 2 DEERE & COMPANY STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME For the Three and Nine Months Ended July 27, 2025 and July 28, 2024 (In millions of dollars) Unaudited Three Months Ended Nine Months Ended 2025 2024 2025 2024 Net Income $ 1,271 $ 1,731

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