Deere delivered a quarter that perfectly captures today’s unpredictable industrial landscape. The company beat top-line expectations with fourth-quarter revenue of more than $12 billion, showing that global demand for agricultural and construction equipment hasn’t disappeared. But beneath the surface, profitability told a different story. Net income dropped sharply as higher production costs, rising warranty expenses, and ongoing tariff pressure squeezed margins across multiple divisions. Even with solid sales numbers, Deere faced a challenging mix of inventory imbalances, slower replacement cycles, and a cautious farming sector navigating higher interest rates. It was a quarter where the company worked harder, sold more, yet earned less.

The toughest blow came from the Small Agriculture & Turf division, where margins compressed dramatically compared to last year. Management highlighted that farmers are delaying equipment upgrades, distributors are carrying more inventory than they want, and tariffs added unexpected strain at a time when cost control is crucial. Deere also guided for weaker results in 2026, calling it the likely bottom of the current agricultural cycle a sign that the industry is adjusting to softer demand and a more disciplined spending environment. The company is shifting its focus toward operational efficiency, smarter inventory management, and selective investments rather than rapid expansion.