Deere & Company Q2 2026 Earnings Recap

Shares dropped 5.2% after Deere reported ongoing volume declines in its large Production and Precision Ag segment, coupled with margin pressure from higher production costs and a cautious outlook on the ag equipment industry.

Key Takeaways

• Production and Precision Ag net sales fell 14% year-over-year to $4.5 billion due to lower shipment volumes despite positive price realization (+1 point) and currency tailwinds (+3 points).
• Operating margin in Production and Precision Ag contracted to 15.7%, weighed down by higher production costs.
• Small Ag and Turf segment delivered a 16% sales increase to $3.49 billion, with improved volumes and favorable pricing driving a 20.6% operating margin.
• Deere maintained its full year guidance for fiscal 2026 but expects a continued decline in large ag equipment sales of 15-20% in the U.S. and Canada, citing muted grower sentiment from elevated input costs and high interest rates.
• South America and Asia markets face headwinds including elevated costs and currency strength, pressuring near-term equipment demand despite some stability in other geographies.