Deere profits slide as tariffs and weak demand squeeze margins; buybacks, financial services help

Deere & Company (NYSE: DE) - Quick take (what's happening inside)

Management is navigating weaker equipment demand, higher tariff costs and margin pressure while leaning on John Deere Financial, share repurchases and higher cash balances. Key moves: deconsolidation of Banco John Deere S.A. (50% sale to Bradesco), a $61M pretax impairment on external battery operations, continued buybacks under the $18B program and a sustained quarterly dividend increase.

Key points & statistics (facts from the quarter / YTD)

* Net sales - Q3 FY2025: $12,018M vs Q3 FY2024: $13,152M (down 9%).

* Net sales - Nine months FY2025: $33,290M vs FY2024: $40,572M (down 18%).

* Net income attributable to Deere & Company - Q3 FY2025: $1,289M vs Q3 FY2024: $1,734M (down 26%).

* Net income attributable - Nine months FY2025: $3,962M vs FY2024: $5,855M (down 32%).

* Diluted EPS - Q3 FY2025: $4.75 vs Q3 FY2024: $6.29. Nine months diluted EPS FY2025: $14.57 vs FY2024: $21.04.

* Cost of sales to net sales - Q3 FY2025: 73.1% vs Q3 FY2024: 68.9% (margin compression).

* Total operating profit - Q3 FY2025: $1,568M vs Q3 FY2024: $2,297M (down 32%).

* Financial Services net income - Q3 FY2025: $205M vs Q3 FY2024: $153M (+34%); YTD: $597M vs $523M (+14%).

* Cash and cash equivalents - July 27, 2025: $8,580M (cash + marketable securities total reported $9,987M).

* Total assets / total liabilities - Assets: $107,817M; Liabilities: $82,553M; Deere & Co. stockholders' equity: $25,175M (July 27, 2025).

* Short-term borrowings: $14,607M; Long-term borrowings: $44,429M (July 27, 2025).

* Inventories: $7,713M (LIFO; estimated FIFO excess $2,864M).

* Financing receivables - net: $43,930M; Financing receivables securitized - net: $7,948M.

* Allowance for credit losses: $258M (end of period); credit provisioning higher YTD (provision of $245M YTD).

* Repurchases in Q3 2025: 582K shares; remaining authorization under December 2022 $18B plan: $7.9B (approx. 15.3M shares at quarter-end price).

* Dividends declared per share (Q3): $1.62; dividends paid YTD: $4.71.

* Tariff impact disclosed: approx. $300M direct incremental tariffs in first nine months of 2025.

* Special items: $61M pretax impairment related to external battery operations; discrete tax benefits recorded earlier in 2025 totaling favorable items (e.g., $110M realization of foreign NOLs + $53M uncertain tax position adjustment).

Income statement - positives

* Financial Services improved profitability (lower provisions and better operating results YTD), helping consolidated earnings.

* Interest expense decreased (Q3 interest expense $794M vs $840M prior year) - lower average borrowings / rates helped.

* Selling, general & administrative expenses declined (Q3: $1,217M vs $1,278M) and R&D was largely stable (Q3 R&D $556M).

* Management generated positive operating cash flow: net cash provided by operating activities YTD: $3,464M.

Income statement - negatives / risks

* Revenue and profit contraction across equipment segments driven by lower shipment volumes - consolidated net sales down 9% Q3 and 18% YTD.

* Gross margin deterioration: cost of sales ratio worsened to 73.1% (Q3) largely from tariffs, lower volumes (higher overhead per unit) and some unfavorable price realization.

* One-time and recurring headwinds: $61M impairment, ~$300M of tariffs YTD, and increased receivable delinquencies raising credit loss provisioning.

* Continued macro and policy risks: high interest rates, trade/tariff uncertainty, and a pending FTC antitrust lawsuit (right-to-repair/repair access) could create legal, remediation or reputational costs.

Operational notes management is emphasizing

* Focus on technology adoption and Solutions-as-a-Service to counteract equipment-volume cyclicality.

* Cost control - reduced SG&A, lower material costs helped offset some volume pressure.

* Balance sheet actions - buybacks and dividends continue while maintaining liquidity (unused credit lines $6,150M at July 27, 2025).

* Capital allocation balancing: planned capex ~ $1,450M for 2025; YTD purchases of property & equipment $852M.

Investor takeaways - concise

* Near-term: demand weakness (especially large ag and construction) and tariff-related cost pressure are driving lower sales and compressed margins; watch volumes, price realization and tariff developments.

* Offsets: strong cash position, active capital return (dividend + buybacks), and financial services continuing to contribute positively to earnings.

* Watchlist: allowance for credit losses and delinquencies in agriculture/retail receivables, outcomes of FTC litigation, tariff escalation, and any further impairments related to new businesses (e.g., battery operations).

Data source: Deere & Company Form 10‑Q for the quarter ended July 27, 2025 (selected figures and disclosures reproduced above).