Participants consider a John Deere 7R 270 culture tractor at the Deere & Co. stand during the World AG Expo at the International Agri-Center in Tulare, California, February 11, 2025.
Patrick T. Fallon | AFP | Getty images
John Deere Faced with a crossroads while the company continues to see a lower demand in the agricultural sector, even if it is committed to investing millions in American manufacturing and has promised a more bright road to come.
The agricultural machine company warned its financial call in the third quarter last week last week that it notes a much softer request, displaying a significant decrease from one year to the other of net profit and sales.
The company strives to position itself in the larger agricultural sector, which has experienced growing challenges with the increase in costs, the impacts of climate change, the shortages of labor and more.
Farmers also faced lower prices on crops such as corn and cereals and have therefore reduced their expenses. In turn, the target audience of Deere has resumed its desire to buy new agricultural equipment.
Deere has also been struck by pricing costs, saying that it could take a $ 600 million for the year 2025. The company has already seen $ 300 million in a year rate fees to date.
Just after having published its income, the company confirmed to CNBC that it had announced 238 layoffs in its factories in Illinois and Iowa, adding to thousands of people who have been dismissed in the past year. The company has cited the drop in demand and lower volumes as main factors behind job discounts.
“As indicated during our last call on results, the AG economy in difficulty continues to have an impact on the orders of the John Deere equipment,” said Deere to CNBC in a statement. “This is a difficult period for many farmers, producers, and has a direct impact on our short -term business.”
The manufacturer employs more than 70,000 people worldwide.
However, Deere has identified enough green shoots to point out a less touching future.
During its last call on results, the company’s leaders underlined the growth of demand in Europe and South America after seeing weakness in North America. Despite the macroeconomic opposite winds, the president of Deere of his world division of agriculture and lawn said that the company remained confident in its future.
“We think there are positive tail winds of what we see in commercial transactions, and we think that there are positive tail winds of what we see in tax policy,” said Cory Reed during the call.
And in June, the company published a statement that “the myth broke out” any statement that Deere may need to close its American manufacturing due to the fall in demand. Instead, the company said it was making a “daring decision” to invest $ 20 billion in American manufacturing over the next 10 years.
It follows a series of similar announcements of companies that have been trying to consolidate their good faith “Made in the USA” since President Donald Trump took office. Before the elections, Trump threatened with 200% prices if it moved production in factories in Mexico.
“During the next decade, we will continue to invest significant investments in our main American market,” CEO John May said in the press release. “This underlines our dedication to innovation and growth while remaining competitive on a global market.”
What Wall Street says
Despite the difficulties of the wider agricultural sector, Wall Street analysts on the whole remain optimistic about the Deere route to come.
Oppenheimer’s analyst Kristen Owen last week that she remained optimistic about Deere and expects increased confidence in 2026, telling CNBC that she believes that the company takes “prudently optimistic prospects”.
Even Trout analyst Jamie Cook, who lowered her goal after Deere’s profits last week and underlined an uncertain perspective for 2026, said that he was still thinking that this year was marked for the benefit of the company’s action.
The company’s shares experienced an increase of almost 30% compared to the period of one year.
Deere stock
Looking at the history of Deere and the success that the agricultural industry has taken over in recent years, Da Davidson’s analyst Michael Shlisky told CNBC that he could not imagine that the company was going much lower from here.
“The way I would say that it is 2025 could be the worst, the lowest number of tractors’ sales in the history of modern agriculture,” he said, with the potential of the tendency to swing upwards.
Although optimism does not translate directly into sales today, Shlisky said that the “advice” of progress was sufficient to make it enthusiastic by the future of the company, including growth in Europe and South America.
“When some parts of the world are better, the parties that do not are likely to follow,” said Shlisky.
Although he does not directly comment on the last red -like cycle, Shlisky said that he did not think that investors would be surprised to see the necessary cost reduction measures at this stage of the company’s trajectory.
Likewise, Morgan Stanley analysts have written in a note that, although demand can decrease, they support a thesis that Deere’s revenues have thorough and that the company remains an “attractive opportunity in the longer term”.
Analyst Angel Castillo told CNBC that Deere and the agricultural sector as a whole were cyclical, so although the short term remains uncertain, the company’s long -term prospects are likely to bounce back, noting that precision agriculture in particular is likely to take off.
“This is one of the unique areas where we think that even if there are more challenges next year, as we are waiting for in a way, the risk of lowering of earnings is much higher or already captured by expectations,” said Castillo.
With its latest cost reduction measures, Deere runs out in not following or by creating a supply chain problem, Castillo added.
“Reality today is that we are always in an uncertain environment, and I think they were managing in a disciplined and rational way to try to make sure not to create a worse environment,” he said.
