John Deere sales suffer as tariffs, crop prices hit hard
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Higher tariffs and lower crop prices are dampening demand for John Deere equipment as the company says many of its customers "remain cautious" about the economy.
Why it matters: Deere serves as a reflection of the health of the American agricultural sector and construction industry.
By the numbers: The company reported a 9% decline in quarterly revenue to $12 billion and a 26% decline in net income to $1.29 billion.
- It also projected $600 million in pretax costs from tariffs for the year, largely due to trade with Europe and India, as well as duties on steel and aluminum.
- Overall, the company lowered the high end of its profit outlook for the year by $250 million.
On the demand side, Deere said customers are "waiting and seeing" on a clearer picture of their end markets as tariff rates settle.
- The persistence of lower commodity prices also continues to crimp customers' margins, investor relations director Josh Beal said on the company's earnings call Thursday.
- Those uncertainties "have made farmers increasingly cautious in spending decisions and more hesitant to accept higher machinery prices," CFRA Research equity analyst Jonathan Sakraida said in a research note.
Between the lines: Deere was not able to make up for the tariffs with price increases. In fact, prices fell.
- Prices declined in the construction and forestry segment and in the large agricultural segment, CFO Joshua Jepsen said on the call.
- In the large agricultural segment, the price decreases were "primarily driven by actions taken to address used inventory in North America," Jepsen said.
- On the construction side, Jepsen cited competitive pressure in the North American earthmoving market for the need to be aggressive on pricing.
The impact: The stock was down 8.4% at one point, marking the biggest intraday drop since May 2022, according to Bloomberg.
