John Deere sales suffer as tariffs, crop prices hit hard

Axios

a day ago

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.