Dive Brief:
- Deere & Co., a maker of tractors, bulldozers and other equipment, has increased its 2026 sales guidance by $250 million, driven by positive order trends in its construction and forestry division as data center and large infrastructure projects support demand.
- The Moline, Illinois-based company raised the floor of its full-year outlook from $4.5 billion to $4.75 billion in its latest earnings report Thursday. The construction and forestry unit saw sales increase 18% to $3.6 billion during the quarter that ended Aug. 2, compared to the same period last year. Segment profit surged 84% to $436 million.
- Deere recognized $110 million in tariff refunds during the third quarter, which benefited its small agriculture and turf division. It also navigated sales and profit declines from its largest segment, production and precision agriculture, as elevated input costs and trade flow uncertainties weighed on farmer demand.
Dive Insight:
Recently, companies supporting the construction industry are seeing a boost in sales as demand for large-scale infrastructure projects like data centers, electric grids and manufacturing facilities takes off.
Christopher Seibert, director of investor relations at Deere, said on an earnings call Thursday that the company’s order books for construction equipment are largely full for 2026, with customer backlogs extending into fiscal year 2027. He also noted “strong momentum” for its SmartGrade technology, a 3D grade control system that automates processes for bulldozers, with adoption up more than 50% year-to-date.
“While we have increased production rates across our construction factories, continued order strength and retail momentum now have us producing modestly below retail demand,” Seibert said.
Deere is expecting the construction equipment industry to be up 5% to 10% this year, according to its latest market forecast. The company is also bracing for the global forestry industry to be down 10%. Dan Pulley, Deere’s manager of investor relations, said on the call that Deere’s forestry estimates were due to “subdued residential construction activity” and “softer log and lumber prices” that have weighed on demand in North America.
During the quarter, Deere’s small agriculture and turf division, which comprises items like lawn mowers and golf course maintenance equipment, saw sales increase 12% to nearly $3.4 billion over last year. Seibert said segment demand was positive, noting stronger cash flow levels from dairy and livestock customers and improvements in the turf segment following “several years of inventory and demand adjustments.” Segment profit jumped 28% to $622 million over the period.
Seibert noted that small agriculture and turf benefited from the International Emergency Economic Powers Act tariff refunds. Deere recognized $110 million of IEEPA refunds during the quarter but did not provide a detailed breakdown of how much each segment benefited.
Year-to-date, the company has received $382 million from the IEEPA refunds and has assumed it will receive no further refunds for the rest of fiscal year ending Nov. 1, 2026.
Deere’s production and precision agriculture segment, which comprises large tractors and combines, saw softer earnings during the third quarter. It generated quarterly sales of nearly $4 billion, down 6% over last year. Segment profit totaled $527 million, down 9%.
Deanna Kovar, president of Deere’s worldwide agriculture and turf division, production and precision, said on the call that farmers in South America and Europe faced elevated input costs and higher interest rates, which made for difficult market conditions. North America has been relatively stable, but soft.
“The agricultural environment remains challenging, but we continue to believe that 2026 represents the bottom of the ag equipment cycle,” CFO Brent Norwood said on the call. “While the recovery is likely to be measured and is expected to vary by region, the underlying trends are moving in the right direction.”
