By Connor Hart

Deere said it expects the difficult market conditions that weighed on its earnings and sales in 2025 to continue into next year.

The farm-equipment manufacturer said tariffs continue to pressure margins, and it is facing persistent challenges in its large tractor business. The company is working to manage inventories across the business by aligning production with retail demand and continuing efforts to reduce high levels of used equipment in the market.

While these efforts are helping, executives said the market remains depressed as farmers cut back on big-ticket purchases amid challenging farm fundamentals and elevated interest rates.

"Our organization is used to managing cyclicality, but this year we faced an additional headwind of heightened uncertainty in a rapidly changing business environment," Chief Executive John May said Wednesday on a call with analysts.

Shares fell 4.9% to $473.51 in midday trading, though the stock is up more than 13% year-to-date.

Looking ahead, the Moline, Ill., company guided for net income between $4 billion and $4.75 billion in the coming year, below the $5.11 billion that analysts polled by FactSet are expecting. Raymond James analysts noted the forecast underscores uncertainty around its large-equipment business in North America.

Deere expects sales in its production and precision-agriculture business to fall 5% to 10% in 2026. The decline will be partially offset by approximately 10% sales growth in both its small-agriculture and turf division, and its construction-and-forestry business.

Currently, construction and infrastructure demand remains strong, supported by U.S. government spending and the rapid buildout of data centers across the country. Small-agriculture and turf also benefit from more stable market fundamentals and demand for smaller machinery, executives said.

May noted that Deere is encouraged by the Trump Administration's support of the agricultural economy, as trade agreements and policies have helped drive growth and stability for farmers.

For its three months ended Nov. 2, Deere posted a profit of $1.07 billion, down from $1.25 billion in last year's comparable quarter. Quarterly earnings were $3.93 a share, ahead of the $3.84 a share that analysts had expected.

Net sales jumped 14% to $10.58 billion and topped the $9.83 billion that Wall Street had modeled. Including other revenues, the company's top line came in at $12.39 billion.

Sales in Deere's production and precision-agriculture business climbed 10%, driven by higher shipment volumes and favorable pricing. Small-agriculture and turf sales rose 7%, largely reflecting increased shipments, while construction and forestry sales jumped 27%, fueled by higher volumes and strong demand for earthmoving equipment.

Write to Connor Hart at connor.hart@wsj.com

(END) Dow Jones Newswires

November 26, 2025 12:29 ET (17:29 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.