Tractor maker Deere flags higher 2026 tariff hit, weak profit

By Nathan Gomes and Nandan Mandayam

(Reuters) -Deere & Co on Wednesday flagged a bigger hit from tariffs in 2026 and forecast its annual profit below estimates on the back of weaker margins on large tractors, sending the farm-equipment maker's shares down 5%.

CEO John May said ongoing margin pressures from tariffs would continue to weigh on its large farm equipment unit, although he expects to benefit from cost cuts and demand in its forestry and small agriculture markets.

The company expects a pre-tax tariff hit of around $1.2 billion in fiscal 2026, compared with nearly $600 million in 2025.

U.S. President Donald Trump's sweeping tariffs have impacted companies across sectors, especially manufacturing and industrial firms that rely on imported raw materials.

Lower crop prices and rising production costs have prompted farmers to delay big-ticket purchases and opt for rentals or preowned units for large agricultural equipment including tractors and combine harvesters.

Deere had also been considering production shifts, higher pricing and widening its portfolio of used equipment as it looked to offset weak demand.

CFRA Research analyst Jonathan Sakraida said he does not expect Deere to recover until fiscal 2027, adding that the company struggled to offset tariff impacts.

The company expects its annual net income for fiscal 2026 to be between $4.00 billion and $4.75 billion, below analysts' estimates of $5.33 billion, according to data compiled by LSEG.

The farm-equipment maker posted a quarterly net income of $1.06 billion, or $3.93 per share, for the quarter, down from $1.24 billion, or $4.55 per share, in the year-ago period.

Analysts on average had expected a quarterly profit of $3.85 per share.

Its fourth-quarter revenue rose 11% to about $12.4 billion from a year ago, topping estimates of $9.85 billion.

(Reporting by Nandan Mandayam and Nathan Gomes in Bengaluru; Editing by Maju Samuel)

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