Deere & Co (NYSE:DE) stock rose 1.87% (As on May 16, 11:21:57 AM UTC-4, Source: Google Finance) after the company cut the lower end of its annual profit forecast but beat Wall Street expectations for second-quarter results due to cost-saving measures and inventory management. Farmers facing high interest rates and weaker crop prices are leaning towards renting rather than buying machinery, weighing on sales of big-ticket equipment such as tractors and combines. Deere was able to cushion the blow from softer demand by reducing production and warranty-related expenses. U.S. President Donald Trump’s tariffs have added to production costs and fueled uncertainty for large industrial firms. The company currently expects tariffs to cost Deere more than $500 million in 2025 before taxes and that they were taking a measured approach to the ongoing uncertainty. The company was prepared to invest $20 billion in the U.S. over the next decade.
Moreover, Worldwide net sales and revenues decreased 16 percent, to $12.763 billion, for the second quarter of 2025 and decreased 22 percent, to $21.272 billion, for six months. Production and precision agriculture sales decreased for the quarter as a result of lower shipment volumes. Operating profit decreased due to lower shipment volumes / sales mix and the unfavorable effects of foreign currency exchange, partially offset by lower production costs and price realization. Construction and forestry sales decreased for the quarter due to lower shipment volumes. Operating profit decreased primarily due to lower shipment volumes / sales mix and unfavorable price realization. Financial services net income for the quarter was flat due to less-favorable financing spreads and a higher provision for credit losses, offset by lower SA&G expenses and a reduction in derivative valuation adjustments.
DE in the second quarter of FY25 has reported the adjusted earnings per share of $6.64, beating the analysts’ estimates for the adjusted earnings per share of $5.58. The company had reported the adjusted revenue decline of 18 percent to $11.17 billion in the second quarter of FY25, beating the analysts’ estimates for revenue of $10.8 billion, according to data compiled by LSEG. Quarterly net income fell to $1.8 billion compared with $2.37 billion a year ago. Small agriculture and turf sales decreased for the quarter as a result of lower shipment volumes, partially offset by price realization.
The world’s largest agricultural-equipment maker expects its annual net income to now be between $4.75 billion and $5.5 billion, compared to its prior forecast of $5 billion to $5.5 billion.