Business Context and Reporting Period
Company: Deere & Company (DE)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal Year ended November 2, 2025 (53 weeks)
Business Overview: Deere is a global leader in agricultural, turf, construction, and forestry equipment, supported by a Financial Services segment. Operations are managed through four segments: Production & Precision Agriculture (PPA), Small Agriculture & Turf (SAT), Construction & Forestry (CF), and Financial Services (FS). The company is executing its "Smart Industrial Operating Model" and refined "Leap Ambitions" focused on automation, autonomy, and digitalization.
Key Financial Metrics (Fiscal 2025)
| Metric | 2025 | 2024 | % Change |
|---|---|---|---|
| Net Sales and Revenues | $45,684 million | $51,716 million | -11.7% |
| Net Income (Attributable to Deere) | $5,027 million | $7,100 million | -29.2% |
| Diluted EPS | $18.50 | $25.62 | -27.8% |
| Operating Cash Flow | $7,459 million | $9,231 million | -19.2% |
| Cost of Sales to Net Sales | 72.4% | 68.8% | +360 bps |
| Total Assets | $105,996 million | $107,320 million | -1.2% |
| Stockholders' Equity | $25,950 million | $22,836 million | +13.6% |
Material Changes vs. Prior Period
- Revenue Decline: Net sales decreased primarily due to lower sales volumes across all equipment segments driven by unfavorable market conditions, including high interest rates, elevated used equipment inventory, and lower commodity prices.
- Segment Performance:
- PPA: Net sales down 17% ($17.3B); Operating profit down 41% ($2.7B). U.S./Canada volumes down 30%, partially offset by a 22% increase in Brazil.
- SAT: Net sales down 7% ($10.2B); Operating profit down 26% ($1.2B). U.S./Canada volumes down 17%.
- CF: Net sales down 12% ($11.4B); Operating profit down 49% ($1.0B). U.S./Canada volumes down 15%.
- Financial Services: Net income increased 28% to $890 million, driven by favorable financing spreads, lower credit loss provisions, and special items, despite a 3% revenue decline.
- Margin Compression: Cost of sales ratio increased to 72.4% due to higher tariffs (approx. $600 million direct impact) and production inefficiencies from lower volumes, partially offset by reduced material costs.
- Special Items: 2025 included a $95 million litigation accrual (antitrust), a $61 million impairment charge (battery operations), and a $32 million gain related to the deconsolidation of Banco John Deere S.A. (BJD).
Guidance, Outlook, and Risks
Outlook for Fiscal 2026
- Agriculture & Turf: Large agriculture sales in North America expected to remain subdued due to challenging farm fundamentals. Small agriculture and turf sales expected to be flat to slightly up. South America demand expected to be flat; Brazil demand tempered by high interest rates.
- Construction & Forestry: U.S. and Canada earthmoving/compact construction sales projected flat to slightly higher, supported by infrastructure spending and data center construction. Global forestry and roadbuilding markets expected to remain flat.
- Financial Services: Net income expected to be down due to unfavorable prior period special items and average portfolio levels, though financing spreads are expected to be favorable.
Key Risks and Contingencies
- Legal Proceedings: Ongoing antitrust lawsuit filed by the FTC and multiple states alleging monopolization regarding repair rights. The company is in preliminary discussions for a potential resolution; outcome remains uncertain.
- Trade Policy: New U.S. tariffs and retaliatory measures continue to impact costs and profitability. The Supreme Court is reviewing tariffs under IEEPA, which could provide relief.
- Market Conditions: Elevated interest rates, high used equipment inventory, and lower commodity prices continue to pressure customer demand and liquidity.
- Credit Quality: Allowance for credit losses increased in 2025 due to elevated delinquencies in agriculture and turf accounts.
Investor Verification Checklist
- Antitrust Litigation: Monitor the status of the FTC lawsuit and potential settlement terms regarding repair rights.
- Tariff Exposure: Verify the impact of the Supreme Court ruling on IEEPA tariffs and the company's ability to pass costs to customers.
- Used Equipment Inventory: Track dealer inventory levels of used equipment, which is a primary constraint on new equipment sales.
- Credit Loss Provisions: Review trends in delinquency rates and the adequacy of the allowance for credit losses in the Financial Services segment.
- Share Repurchases: Note that $7.9 billion remains available under the current $18 billion repurchase plan, though repurchases were paused in Q4 2025 to manage cash flow.