Deere keeps full-year profit target unchanged, taking sheen off quarterly earnings beat

By Nandan Mandayam

May 21 (Reuters) – Farm equipment maker Deere left its full-year profit forecast unaltered, despite topping second-quarter profit estimates on Thursday, as it battles stubbornly weak demand for its large tractors and combine harvesters.

Tractor makers like Deere have been hamstrung by muted demand for new farm equipment over the last few years, as weak crop prices and rising costs have led farmers to extend use of their machinery.

U.S. net farm income, a broad gauge of the farm economy’s profitability, is expected to drop 0.7% in 2026.

Deere shares fell 7.5% to a four-month low and looked set for their biggest one-day drop in four years.

“While encouraged by the upside to the construction segment, investors are still looking for signs of recovery in the agriculture segments, which remains a mixed bag globally,” Oppenheimer analyst Kristen Owen said.

Deere kept its full-year net income target unchanged at $4.5 billion to $5 billion, largely due to weak farm equipment demand. Deere executive Christopher Seibert blamed this on “elevated and volatile input costs” for farmers due to the U.S.-Israel war with Iran.

That has taken the sheen off a strong second quarter in which profit and revenue topped estimates, thanks to improved demand for Deere’s small agriculture and construction equipment.

The company’s construction segment has been a bright spot too, benefiting from an AI-led build out of data centers.

Deere now expects the segment’s full-year revenue to rise 20%, up from its prior forecast of a 15% growth, and annual operating margins of 10%-12%, up from 9%-11% estimated earlier.

Deere posted quarterly net income of $6.55 per share. Analysts on average expected $5.70 per share, according to data compiled by LSEG. Quarterly net sales of $11.78 billion surpassed an estimated $11.54 billion.

The company received a $272 million tariff refund during the quarter, but expects the full-year impact to remain unchanged.

(Reporting by Nandan Mandayam in Bengaluru; Editing by Joyjeet Das)