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DEERE & CO

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Business Summary

Deere & Company operates in the global agricultural, turf, construction, and forestry equipment industries, as well as providing financial services through John Deere Financial. The company's business is managed through four segments: Production & Precision Agriculture (PPA), Small Agriculture & Turf (SAT), Construction & Forestry (CF), and Financial Services (FS). The agricultural equipment industry is cyclical and affected by factors including farm income, commodity prices, world grain stocks, acreage planted, crop yields, government policies, and global trade policies. The construction and forestry equipment market is influenced by residential, commercial, and public construction levels, infrastructure investment, and the condition of the forestry products industry. The company operates globally with sales and marketing support organized around four geographic regions: Africa, Asia, and the Middle East; Europe and the Commonwealth of Independent States; Latin America and South America; and the U.S., Canada, and Australia, with the majority of sales occurring in the U.S. and Canada.

The equipment operations compete in a variety of global and regional markets. Principal competitive factors include product performance, technology features, innovation, quality, distribution, sustainability, financing, customer service, and value. John Deere's brand recognition is a competitive factor in North America and many other parts of the world. Primary competitors named in the filing for the agriculture and turf operations include AGCO Corporation, CLAAS KGaA mbH, CNH Industrial N.V., Kubota Tractor Corporation, and The Toro Company. The construction and forestry segment's global competitors include Caterpillar Inc., CNH Industrial N.V., Doosan Infracore Co., Ltd. and its subsidiary Doosan Bobcat Inc., Fayat Group, GOMACO Corporation, Hitachi Construction Machinery, Komatsu Ltd., Kubota Tractor Corporation, LGMG, Liugong, Ponsse Plc, SANY Group Co., Ltd., SDLG, Terex, Tigercat Industries Inc., Volvo Construction Equipment, and XCMG. The company also faces competition from short-line and specialty manufacturers, local or regional competitors, and non-traditional technology-focused companies and start-up ventures.

Deere & Company generates revenue through the manufacture and sale of equipment and technology solutions, and through financing services. The equipment operations (PPA, SAT, and CF) generate revenue primarily from the sale of equipment, service parts, and technology solutions to dealers and retail customers. The Financial Services segment generates revenue by providing and administering financing for retail purchases of new and used equipment, financing revolving charge accounts, providing wholesale financing to dealers, and offering extended equipment warranties. The company's Smart Industrial Operating Model aims to deliver value through three pillars: Production Systems, Technology Stack, and Lifecycle Solutions. The company also introduced Leap Ambitions in 2022, which were refined in December 2025, featuring long-term financial and operational goals emphasizing automation, autonomy, digitalization, lifecycle solutions, and Solutions as a Service (SaaS).

The Production & Precision Agriculture (PPA) segment generated net sales of $17,311 in fiscal year 2025, representing 45% of equipment operations net sales. This segment defines, develops, and delivers global equipment and technology solutions for production-scale growers of crops like large grains, small grains, cotton, and sugarcane. Products include four-wheel-drive/track and row crop tractors, harvesters, cotton pickers and strippers, sugarcane harvesters and loaders, and related tillage, seeding, and application equipment. The segment also includes precision technologies such as global navigation satellite systems technology, advanced connectivity and telematics, on-board sensors, automation software, and the John Deere Operations Center. The Small Agriculture & Turf (SAT) segment generated net sales of $10,224 in fiscal year 2025, representing 26% of equipment operations net sales. This segment provides equipment and technology solutions for dairy and livestock producers, high-value crop and small acre crop producers, and turf and utility customers. Products include specialty, utility, and compact tractors, hay and forage equipment, turf and utility equipment, and related attachments. SAT equipment is sold through independent retail dealer networks and mass retailers including The Home Depot and Lowe's.

The Construction & Forestry (CF) segment generated net sales of $11,382 in fiscal year 2025, representing 29% of equipment operations net sales. This segment provides construction, roadbuilding, and forestry products with precision technology solutions. Construction products include excavators, motor graders, crawler dozers and loaders, wheel loaders, backhoes, and articulated dump trucks. Compact construction products include skid steers, compact excavators, compact wheel loaders, and compact track loaders. Roadbuilding products from the Wirtgen brand include milling machines, recyclers, slipform pavers, surface miners, asphalt pavers, compactors, and mobile crushing and screening plants. Forestry products include skidders, feller bunchers, forwarders, knuckleboom loaders, and harvesters. The Financial Services (FS) segment primarily provides and administers financing for retail purchases of new and used equipment, finances revolving charge accounts, provides wholesale financing to dealers, and offers extended equipment warranties. In fiscal year 2025, FS revenue (including intercompany) was $6,289 .

In fiscal year 2025, the company experienced unfavorable market conditions resulting in lower sales volumes, greater reliance on sales incentives, and elevated receivable write-offs. The company completed a transaction with Banco Bradesco S.A. in the second quarter of fiscal year 2025 for Bradesco to invest and become 50% owner of the subsidiary in Brazil, Banco John Deere S.A. The company recorded special items in fiscal year 2025 including a litigation accrual of $95 , an impairment of $61 , and a BJD measurement benefit of $32 . In fiscal year 2024, the company recorded special items including legal settlements of $57 , an impairment of $28 , employee-separation programs of $152 , and a BJD measurement expense of $59 . The company has a share repurchase plan announced in December 2022 to purchase up to $18.0 billion of shares of common stock. As of the end of the fourth quarter of 2025, $7.9 billion of common stock remained to be purchased under this plan. The company also reported backlog orders as of November 2, 2025 of approximately $4.0 billion for the PPA segment, $1.9 billion for the SAT segment, and $3.8 billion for the CF segment.

Net income attributable to Deere & Company declined in fiscal year 2025 compared to fiscal year 2024, driven by declining market conditions. Net sales for equipment operations decreased primarily due to lower sales volumes. The cost of sales to net sales ratio increased to 72.4% in 2025 from 68.8% in 2024, due to higher tariffs and higher overhead costs from production inefficiencies associated with lower volumes, partially offset by reduced material costs and lower employee profit-sharing incentives. Net cash provided by operating activities was $7,459 in 2025, compared to $9,231 in 2024. Net cash used for investing activities was $2,057 in 2025, and net cash used for financing activities was $4,579 in 2025.

Business Outlook

Management provided an industry sales outlook for fiscal year 2026. For large agriculture equipment in the U.S. and Canada, demand is expected to decrease further amidst challenging farm fundamentals for row crop farmers. Small agricultural and turf equipment sales in the U.S. and Canada are expected to be flat to up slightly from 2025 levels. In Europe, the industry is forecasted to be flat to up slightly. Demand in South America is expected to be flat. Industry sales in Asia are forecasted to be down slightly. For construction and forestry, industry sales in the U.S. and Canada for earthmoving and compact construction equipment are projected to remain flat to slightly higher. Global forestry markets are expected to be flat. Global roadbuilding markets are forecasted to remain flat at strong levels. For Financial Services, net income is expected to be down, with an unfavorable average portfolio and unfavorable prior period special items, partially offset by favorable financing spreads.

The company's Smart Industrial Operating Model and refined Leap Ambitions emphasize growth through the use of differentiated equipment and service solutions, including automation, autonomy, digitalization, lifecycle solutions, and Solutions as a Service (SaaS). The company continues to invest in the development and production of advanced technology through integrated agricultural solutions and precision technologies across its portfolio of equipment. Advancements such as precise global navigation satellite systems technology, advanced connectivity and telematics, on-board sensors and computing power, automation software, digital tools, applications, and analytics are designed to improve customer decision-making and job execution. The company is beginning to leverage technology from its PPA segment across other business segments, such as applying cameras, obstacle detection, radars, and machine learning to the CF Smart Detect tool. The company also plans to deliver hybrid-electric and battery electric equipment solutions to help customers reduce tailpipe emissions. In Brazil, the company built a research and development center in Indaiatuba in 2024 dedicated to tropical agriculture.

The cost of sales to net sales ratio increased to 72.4% in 2025 from 68.8% in 2024, driven by higher tariffs and higher overhead costs from production inefficiencies associated with lower volumes, partially offset by reduced material costs and lower employee profit-sharing incentives. The company continues to focus on structural profitability and strategically investing in solutions that deliver value to customers. The company is focused on manufacturing cost optimization through improvements in process, optimization of factories, product design, advanced manufacturing technology, and supply management and logistics. The company is also integrating emerging technologies such as artificial intelligence driven analytics and advanced robotics into its manufacturing processes where appropriate.

The company's manufacturing, logistics, and scheduling systems are dependent on forecasts of industry volumes and the company's anticipated share of industry sales. The company has a global manufacturing footprint that allows it to produce products close to the markets where they are sold. For example, most large agricultural equipment is assembled in the U.S. for U.S. customers. The company is focused on increasing the resiliency of its supply chain and monitoring supply chain risks to minimize the likelihood of business disruptions. Mitigation efforts include working with the supply base to prioritize allocations, multi-sourcing selected parts and materials, entering long-term contracts for some critical components, and using alternative freight carriers to expedite delivery. Capital expenditures are forecasted to be $1.4 billion in 2026. As of November 2, 2025, the company had approximately 73,100 employees, of which approximately 32,500 were full-time production employees.

Research and development activities are a vital component in the company's Smart Industrial Operating Model. The company makes substantial investments in research and development to improve product quality and performance, develop new products and technologies, integrate sustainable solutions, and comply with government, safety, and engine emissions regulations. Capital expenditures were $1.3 billion in 2025 and are forecasted to be $1.4 billion in 2026. The company has a share repurchase plan announced in December 2022 to purchase up to $18.0 billion of shares of common stock. As of the end of the fourth quarter of 2025, $7.9 billion of common stock remained to be purchased under this plan. The company has a history of paying quarterly cash dividends and currently expects a cash dividend to be paid in the future, though future dividend payments will depend on earnings, capital requirements, financial condition, and other factors considered relevant by the Board.

The company faces several headwinds and constraints. In fiscal year 2025, unfavorable market conditions resulted in lower sales volumes, greater reliance on sales incentives, and elevated receivable write-offs, and certain of these conditions are expected to persist in fiscal year 2026. During fiscal year 2025, new tariffs were imposed in the U.S. for imports from a broad range of countries and materials, and several countries implemented or proposed retaliatory tariffs. The direct impact of incremental tariffs incurred by the company in 2025 was approximately $600 , excluding the impact of tariffs on suppliers and market demand. The company expects certain of these conditions to persist in fiscal year 2026. Elevated used inventory levels in late model-year machines impacted demand for products in North America in 2025, resulting in lower price realization and actions to reduce inventory levels. The allowance for credit losses on retail notes and financing lease receivables increased in 2025 primarily due to higher expected losses on agriculture and turf customer accounts as a result of elevated delinquencies and a decline in market conditions.

Risk Factors

The company's financial results largely depend upon the agricultural market business cycle, and negative conditions in the agricultural industry and general economy cause weakened demand for equipment and services. In fiscal year 2025, unfavorable market conditions resulted in lower sales volumes, greater reliance on sales incentives, and elevated receivable write-offs, and certain of these conditions are expected to persist in fiscal year 2026. The company faces risks associated with international trade laws and policies; during fiscal year 2025, new tariffs were imposed in the U.S. and the direct impact of incremental tariffs incurred by the company was approximately $600 , excluding the impact on suppliers and market demand. The company is subject to a consolidated multidistrict class action lawsuit and a lawsuit filed by the FTC and several state attorneys general alleging monopolization and unfair competition in the market for repair services for John Deere brand agricultural equipment. The company's financial services segment is vulnerable to customers defaulting on contractual obligations, and the allowance for credit losses on retail notes and financing lease receivables increased in 2025 primarily due to higher expected losses on agriculture and turf customer accounts as a result of elevated delinquencies and a decline in market conditions.

Management Priorities

Management's message emphasizes the company's Smart Industrial Operating Model and refined Leap Ambitions as the strategic framework for delivering value to customers and driving growth. The company is focused on three pillars: Production Systems, Technology Stack, and Lifecycle Solutions. Management highlights that deeper integration of technology into equipment to enable customers to do more with less remains a persistent market trend. The company's refined Leap Ambitions, introduced in December 2025, feature multi-year financial and operational goals emphasizing automation, autonomy, digitalization, lifecycle solutions, and Solutions as a Service (SaaS). Management notes that while the company continues to benefit from the adoption of these technologies, revenue from SaaS products did not represent a significant percentage of revenues in 2025. The company's outlook for fiscal year 2026 indicates that large agriculture sales in North America are expected to remain subdued, while small agriculture & turf and construction & forestry sales are expected to improve. For Financial Services, net income is expected to be down, with an unfavorable average portfolio and unfavorable prior period special items, partially offset by favorable financing spreads.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Equipment Operations
  2. [2] Item 1, Business — Equipment Operations
  3. [3] Item 1, Business — Equipment Operations
  4. [4] Item 1, Business — Equipment Operations
  5. [5] Item 1, Business — Equipment Operations
  6. [6] Item 1, Business — Equipment Operations
  7. [7] Item 7, MD&A — Business Segment Results
  8. [8] Item 7, MD&A — Business Segment Results (Special Items)
  9. [9] Item 7, MD&A — Business Segment Results (Special Items)
  10. [10] Item 7, MD&A — Business Segment Results (Special Items)
  11. [11] Item 7, MD&A — Business Segment Results (Special Items)
  12. [12] Item 7, MD&A — Business Segment Results (Special Items)
  13. [13] Item 7, MD&A — Business Segment Results (Special Items)
  14. [14] Item 7, MD&A — Business Segment Results (Special Items)
  15. [15] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  16. [16] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  17. [17] Item 1, Business — Backlog Orders
  18. [18] Item 1, Business — Backlog Orders
  19. [19] Item 1, Business — Backlog Orders
  20. [20] Item 7, MD&A — Consolidated Results
  21. [21] Item 7, MD&A — Consolidated Results
  22. [22] Item 7, MD&A — Cash Flows
  23. [23] Item 7, MD&A — Cash Flows
  24. [24] Item 7, MD&A — Cash Flows
  25. [25] Item 7, MD&A — Cash Flows
  26. [26] Item 7, MD&A — Consolidated Results
  27. [27] Item 7, MD&A — Consolidated Results
  28. [28] Item 7, MD&A — Capital Resources and Liquidity
  29. [29] Item 1, Business — Human Capital Management
  30. [30] Item 1, Business — Human Capital Management
  31. [31] Item 7, MD&A — Capital Resources and Liquidity
  32. [32] Item 7, MD&A — Capital Resources and Liquidity
  33. [33] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  34. [34] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  35. [35] Item 7, MD&A — Trends & Economic Conditions
  36. [36] Item 7, MD&A — Trends & Economic Conditions
  37. [37] Item 8, Financial Statements — Statements of Consolidated Income
  38. [38] Item 8, Financial Statements — Statements of Consolidated Income
  39. [39] Item 8, Financial Statements — Statements of Consolidated Income
  40. [40] Item 8, Financial Statements — Statements of Consolidated Income
  41. [41] Item 8, Financial Statements — Statements of Consolidated Income
  42. [42] Item 8, Financial Statements — Statements of Consolidated Income
  43. [43] Item 7, MD&A — Net Sales and Revenues
  44. [44] Item 7, MD&A — Net Sales and Revenues
  45. [45] Item 7, MD&A — Consolidated Results
  46. [46] Item 7, MD&A — Consolidated Results
  47. [47] Item 7, MD&A — Consolidated Results
  48. [48] Item 7, MD&A — Consolidated Results
  49. [49] Item 7, MD&A — Consolidated Results
  50. [50] Item 7, MD&A — Consolidated Results
  51. [51] Item 7, MD&A — Consolidated Results
  52. [52] Item 7, MD&A — Consolidated Results
  53. [53] Item 7, MD&A — Cash Flows
  54. [54] Item 7, MD&A — Cash Flows
  55. [55] Item 7, MD&A — Business Segment Results
  56. [56] Item 7, MD&A — Business Segment Results
  57. [57] Item 7, MD&A — Business Segment Results
  58. [58] Item 7, MD&A — Business Segment Results
  59. [59] Item 7, MD&A — Business Segment Results
  60. [60] Item 7, MD&A — Business Segment Results
  61. [61] Item 7, MD&A — Business Segment Results
  62. [62] Item 7, MD&A — Business Segment Results
  63. [63] Item 7, MD&A — Business Segment Results (Special Items)
  64. [64] Item 7, MD&A — Business Segment Results (Special Items)
  65. [65] Item 7, MD&A — Business Segment Results (Special Items)
  66. [66] Item 7, MD&A — Business Segment Results (Special Items)
  67. [67] Item 7, MD&A — Business Segment Results (Special Items)
  68. [68] Item 7, MD&A — Business Segment Results (Special Items)
  69. [69] Item 7, MD&A — Business Segment Results (Special Items)

Analysis on 6/8/2026