John Deere revenue up, but farm equipment sales dip; forecasts 20% drop in South America

John Deere achieved a 5% rise in total revenue, reaching $12.6 billion in its third quarter, bolstered by strong performance in its smaller equipment and construction divisions. The company reported a net profit of $1.38 billion, a 7% increase from the previous year.

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Deere presented a solid quarter, which reflects the disciplined execution of our teams and the continued resilience across our portfolio.

Despite the overall revenue growth, the core business of large agricultural machinery experienced a downturn. Sales in the Production and Precision Agriculture division, which includes tractors, harvesters, and precision technology for large-scale farms, decreased by 6% to $4 billion. This decline was attributed to lower shipping volumes, though partially offset by favorable pricing and currency exchange rates.

John May, Chairman and CEO of John Deere, acknowledged the company's solid quarterly performance, highlighting disciplined execution and market resilience. He noted stable conditions in the U.S. market but pointed to weaker conditions in Brazil and Europe impacting sales. The operating profit for the agricultural division fell 9%, with its operating margin narrowing slightly.

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Sales of Production and Precision Agriculture decreased during the quarter as a result of lower shipping volumes, partially offset by favorable price realization and foreign currency translation.

Looking ahead, John Deere projects a significant contraction in the South American market for tractors and harvesters, estimating a drop of 15-20% for the year. This forecast reflects the challenging economic environment in key markets like Brazil and Europe. In contrast, the Small Ag and Turf division saw sales increase by 12%, and the Construction and Forestry division reported an 18% revenue growth.

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Sales of Small Ag and Turf increased during the quarter as a result of higher shipping volumes and favorable price realization.