Deere revenue misses on muted farm equipment demand as tariff impact looms

By Shivansh Tiwary

(Reuters) -Deere's quarterly revenue slumped 35% and missed analysts' expectations on Thursday, as more farmers retained their aging equipment or switched to rentals owing to weak incomes and high borrowing costs.

The world's largest farm-equipment maker also addressed investor concerns about the fallout from President Donald Trump's latest tariffs.

Trump's tariffs on Canada, Mexico and China have increased uncertainty regarding the impact on U.S. farmers, as soybeans, corn, wheat, and meat are particularly vulnerable to retaliatory measures. The levies on Canada and Mexico have been paused for a month, but not on China.

"Our primary focus remains on understanding how proposed tariffs may impact our customers' operations as we recognize their need for free and fair trade and commodities," finance chief Joshua Jepsen said on a call with analysts.

The company's shares, up about 11% this year through Wednesday's close, were last down 1.4% on Thursday.

Meanwhile, prices of industrial metals, crucial for manufacturing equipment, are rising, driven by Trump's 25% tariffs on steel and aluminum amid insufficient domestic production.

"In terms of components or component sourcing, about 10% of our U.S. manufacturing cost of goods sold come from Mexico with less than 2% coming from China and approximately 1% from Canada," Jepsen said.

The company said its forecast did not account for any potential impact from tariffs, citing the rapidly evolving nature of the policies currently.

Deere reiterated its 2025 profit forecast of $5 billion to $5.5 billion, which many analysts had labeled conservative and were anticipating potential upward revisions as the year progressed.

"Even if the trade war abates at some point, farmers will likely navigate uncertainty with a great deal of caution around capex decisions," CFRA analyst Jonathan Sakraida said.

The company now expects sales in its largest production and precision agriculture segment, which includes larger tractors and combines, to fall between 15% and 20%, compared to its previous forecast of a 15% decline.

First-quarter net sales decreased 35% to $6.81 billion, compared with analysts' estimates of $7.7 billion, according to data compiled by LSEG.

Deere reported a profit of $3.19 per share, compared with Wall Street expectations of $3.11, helped by a drop in production costs.

(Reporting by Shivansh Tiwary in Bengaluru; Editing by Sriraj Kalluvila)