Deere Projects Profit Decline for 2025

By Patricia Miller

Nov 22, 2024

Deere anticipates lower profits in 2025 amid falling farm incomes and reduced equipment demand, signaling challenges for the agricultural sector and investors.

Deere Stock on Smartphone Screen

What You Need To Know

Deere & Company (NYSE: DE) anticipates a notable decline in profits for the fiscal year 2025 due to decreasing farm incomes and inflation, predicting earnings between $5 billion and $5.5 billion, which falls short of the average analyst estimate of $5.93 billion. The company expects a 10% to 15% drop in net sales across all machinery segments. In the fourth quarter, net sales from equipment operations dropped by 33% to $9.28 billion, slightly below forecasts, despite an earnings per share figure of $4.55, which outperformed Wall Street expectations of $3.87, thanks to effective cost management.

The agricultural sector faces headwinds from low crop prices, leading to lower farm incomes and curtailing machinery investments. This trend is also reflected in the cautious inventory restocking by dealers, as both Deere and its competitors, CNH Industrial and AGCO, have lowered profit projections amid economic uncertainty. The agricultural equipment market is witnessing decreased demand, adversely affecting major and smaller industry players.

Why This Is Important for Retail Investors

  1. Profit challenges: Lower earnings guidance and declining sales signal revenue and shareholder return risks.

  2. Sector pressures: Falling farm incomes, low crop prices, and cautious dealer inventories reduce machinery demand.

  3. Industry impact: Competitor downgrades and economic uncertainty highlight broader market challenges.

  4. Cost resilience: Strong EPS demonstrates operational efficiency, supporting long-term growth potential.

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Important Notice And Disclaimer

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.