These companies use the creative forces of capitalism to solve big problems—and do well by doing good.

The agricultural machinery giant is using software, connectivity, and automation to boost farm productivity; cut down on fuel, chemical, and water use; and allow customers to meet input-efficiency and emissions goals. It upgraded its harvest automation system in 2025 to add predictive inputs, which enable farmers to measure crop variability and control ground speed. Autonomous tractors allow farmers to cover more ground during crop cycles, the company says. Meanwhile, Deere has introduced technologies like See &amp; Spray Ultimate, which deploys cameras and machine learning to target weeds.

Change the World

The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Based in Moline, Ill., this maker of tractors, combines, and other agricultural gear endured a tough 2024, as weather disruptions and trade tensions fueled a global downturn in farming. The slump in U.S. homebuilding, meanwhile, hurt its construction equipment division. Overall, Deere’s revenue dropped 16% year over year, to $51.7&nbsp;billion.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are electrical equipment and industrial machinery.

Fortune Sector Leaders: Industrials

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 200 companies on this list are transforming industries from the inside out.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500-2023-081-Deere

John Deere—the machinery and equipment company famous for its iconic green tractor—had one of its most profitable years ever in 2022, reaching $7 billion, up 20% from the previous year, as it took a page from the tech industry’s playbook, developing self-driving tractors, satellite-linked smart equipment, and a software-as-a-service business. 
<ul> 
 	<li>Revenues in 2022 grew 19% as the company was able to pass much of the increase in production costs on to farmers who were flush with cash after corn and soybean prices hit record highs.</li> 
 	<li>In May 2023 Deere announced a plan to connect remote farms in Brazil and the U.S. to state-of-the-art machinery via satellite.</li> 
 	<li>The tractor maker suffered a legislative setback in Colorado in April 2023 when Gov. Jared Polis signed a “right to repair” bill, enabling farmers to fix their own equipment, thus ending Deere’s monopoly on repairs of its machinery.</li> 
</ul>

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

This year’s Fortune 500 marks the 68th running of the list.

F500-2022-084-Deere

A staple of American manufacturing for nearly 200 years, Illinois-based Deere makes agricultural and construction machinery as well as diesel engines and lawn care equipment. In 2021, the company posted 24% year-over-year revenue growth. Profits jumped, too, with demand for its machinery snapping back as the global economy rebounded. Deere also smoothed its labor outlook for the near future by reaching a six-year labor agreement with the United Auto Workers union in November 2021, ending a five-week strike. After Russia’s invasion of Ukraine, Deere suspended shipments of machinery to Russia and Belarus.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Even during a pandemic, people still have to eat. Agriculture was one business to ride out 2020 in a strong position. Deere, the 184-year-old American icon and maker of heavy machinery, saw strong agricultural sales corresponding with the seasonality of farming. That was largely enough to counter the lower demand for construction equipment made by Deere over the same time frame, with construction projects halted owing to COVID-19. Deere, however, still saw revenue fall 9.5%, to $35.5 billion, between 2019 and 2020. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">Even during a pandemic, people still have to eat. Agriculture was one business to ride out 2020 in a strong position. Deere, the 184-year-old American icon and maker of heavy machinery, saw strong agricultural sales corresponding with the seasonality of farming. That was largely enough to counter the lower demand for construction equipment made by Deere over the same time frame, with construction projects halted owing to COVID-19. Deere, however, still saw revenue fall 9.5%, to $35.5 billion, between 2019 and 2020.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-88-Deere

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Even during a pandemic, people still have to eat. Agriculture was one business to ride out 2020 in a strong position. Deere, the 184-year-old American icon and maker of heavy machinery, saw strong agricultural sales corresponding with the seasonality of farming. That was largely enough to counter the lower demand for construction equipment made by Deere over the same time frame, with construction projects halted owing to COVID-19. Deere, however, still saw revenue fall 9.5%, to $35.5 billion, between 2019 and 2020. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">Even during a pandemic, people still have to eat. Agriculture was one business to ride out 2020 in a strong position. Deere, the 184-year-old American icon and maker of heavy machinery, saw strong agricultural sales corresponding with the seasonality of farming. That was largely enough to counter the lower demand for construction equipment made by Deere over the same time frame, with construction projects halted owing to COVID-19. Deere, however, still saw revenue fall 9.5%, to $35.5 billion, between 2019 and 2020.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-319-Deere

John May is not even a full year into his tenure as only the 10th chief executive ever to lead the 183-year-old American icon. He finds himself at the helm of the $39.2 billion agricultural giant as it rolls with virus-related punches; Deere briefly suspended production of construction and forestry equipment at some facilities amid weakened demand and pivoted to manufacturing 400,000 face shields for health care workers. For 2019, the company's revenue rose 5.1% year-over-year and profits spiked by 37%, to $3.3 billion. But even before the pandemic, Deere said it expected sales to fall at least 10% in 2020.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-084-Deere

John May is seven months into his tenure as only the 10th chief executive ever to lead the 183-year-old American icon. He finds himself at the helm of the $39.2 billion agricultural giant as it rolls with virus-related punches; Deere briefly suspended production of construction and forestry equipment at some facilities amid weakened demand, and is now manufacturing 400,000 face shields for health care workers. The company's revenue rose 5.1% year-over-year and profits spiked by 37%, to $3.3 billion in 2019. But even before the pandemic, Deere said it expected sales to fall at least 10% in 2020.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Sector

Culture rank

Process rank

Product rank

Years on list

Previous rank

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Change The World

Impact Segment

Deere (commonly known as John Deere) is an agricultural giant that manufactures and sells tractors, harvesters, loaders, and other equipment used by farmers worldwide. Founded in 1837 as a maker of steel plows pulled by horses, the company has expanded into heavy machinery used for golf course maintenance, snow removal, and logging. The company introduced a self-driving tractor in 2022 and is pushing into machine learning to help increase agricultural production. As of 2024, it was among a small number of companies that have been on the Fortune 500 every year since the list’s inception in 1955.

Q3 2026

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Deere (DE): Company Profile, Stock Price, News, Rankings

legacy

Deere

deere

Good morning, and welcome to Deer and Company First Quarter Earnings Conference Call. Your lines have been placed on a listen only until question and answer session of today's conference. I would now like to turn the call over to Mr. Josh Beal, Director of Investor Relations. Thank you.

Thank you. Hello. Welcome, and thank you for joining us on today's call. Joining me on the call today are Josh Jepsen, Chief Financial Officer and Josh Rollater, Manager, Investor Communications. Today, we'll take a closer look at Deere's first quarter earnings, then spend some time talking about our markets and our current outlook for fiscal twenty twenty five.

After that, we'll respond to your questions. Please note that slides are available to complement the call this morning. They can be accessed on our website at johndeere.com/earnings. First a reminder, this call is broadcast live on the Internet and recorded for future transmission and use by Deere and Company. Any other use, recording or transmission of any portion of this copyrighted broadcast without the express written consent of Deere is strictly prohibited.

Participants in the call, including the Q and A session, agree that their likeness and remarks in all media may be stored and used as part of the earnings call. This call includes forward looking statements concerning the company's plans and projections for the future that are subject to uncertainties, risks, changes in circumstances and other factors that are difficult to predict. Additional information concerning factors that could cause actual results to differ materially is contained in the company's most recent Form eight ks Risk Factors in the Annual Form 10 ks as updated by reports filed with the Securities and Exchange Commission. This call may also include financial measures that are not in conformance with accounting principles generally accepted in The United States Of America Additional information concerning these measures, including reconciliations to comparable GAAP measures, is included in the release and posted on our website at johndeere.com/earnings under Quarterly Earnings and Events. I will now turn the call over to Joshua Leder.

Good morning, and thank you for joining us today. John Deere completed the first quarter with a 7.7% margin for the equipment operations. Global ag fundamentals generally improved this quarter. However, demand remains constrained by overall uncertainty in the market, which has continued to put pressure on order velocities, particularly in North America. Our fiscal twenty twenty five ag outlook remains largely unchanged from prior guidance when excluding the impacts of currency movement over the past quarter.

shipping volumes were lower in the quarter versus expectations as we calibrated full year production schedules to build as efficiently as possible. As a result, we expect to recover the first quarter shortfall over the remainder of the year. In Construction and Forestry, end market fundamentals remain supportive of replacement demand, albeit dampened by elevated interest rates, acro uncertainty and a competitive environment. Planned underproduction in our Earthmoving segment during the first quarter drove further reductions in field inventory levels, enabling production optionality as market demand develops over the course of

the year. Slide three opens with results for the first quarter.

Net sales and revenues were down 30% to $8,508,000,000 while net sales for the equipment operations were down 35% to $6,809,000,000 Net income attributable to Deere and Company was $869,000,000 or $3.19 per diluted share, which included $163,000,000 of discrete tax benefits related to special items. Turning to our individual segments, we begin with the Production and Precision Ag business on Slide four. Net sales of $3,067,000,000 were down 37% compared to the first quarter last year, primarily due to lower shipment volumes. Price realization was positive by just over one point. Currency translation was negative by roughly 2.5 points.

Operating profit was $338,000,000 resulting in an 11% operating margin for the segment. The year over year decrease was primarily due to lower shipment volumes and sales mix, partially offset by lower SA and G and R and D expenses and reduced production costs. Moving on to small ag and turf on Slide five. Net sales were down 28%, totaling $1,748,000,000 in the first quarter as a result of lower shipment volumes. Price realization was positive by just under one point.

Currency translation was negative by just under one point as well. Operating profit declined year over year to $124,000,000 resulting in a 7.1% operating margin. The decrease was primarily due to lower shipment volumes and sales mix, partially offset by lower production costs. Slide six gives our industry outlook for ag and turf markets globally. We continue to expect large ag equipment industry sales in The U.

S. And Canada to be down approximately 30% as higher interest rates, macro uncertainty and elevated used inventory levels are slightly tempered by improving ag fundamentals and expectations for farm net income, which is further bolstered by additional government support. For small ag and turf in The U. S. And Canada, industry demand estimates remain down around 10%.

The Dairy and Livestock segment remains at strong levels of profitability despite reaching the lowest level of cattle inventory in over seventy years. However, profitability in these segments has not yet translated into equipment purchases. U. S. And Canada demand has been further impacted by continued weakness in turf and compact utility tractors as high interest rates weigh on purchase decisions.

Moving to Europe, the industry is now projected to decline around 5%. Farm fundamentals have stabilized, albeit down with less volatile commodity prices and stronger dairy margins offsetting macro uncertainty. Additionally, in Central And Eastern Europe, reduced pressure from Ukrainian grain imports is supporting better than expected farm net incomes. In South America, industry sales of tractors and combines are expected to be roughly flat following two years of significant industry declines. In Brazil, sentiment is showing signs of improvement as depreciation in the has pushed local commodity prices higher amidst a year of stronger yields.

Combined with softening input costs, farm margins are expected to improve. Additionally, declining production, tight global stocks and strong demand have driven outsized profitability in coffee bean production, supporting equipment demand for small and mid sized tractors. In Argentina, decreased currency risks and export tax reductions will support some improvements in farm margins despite negative impacts of dryness at the beginning of the year. And industry sales in Asia are still projected to be down slightly. Next, our segment forecast begins on Slide seven.

For Production and Precision Ag, net sales are now forecasted to be down between 1520% for the full year. The forecast assumes roughly one point of positive price realization for the full year, offset by 2.5 points of negative currency impact. The reduction to our sales guide from the prior quarter is primarily driven by the strengthening of the dollar relative to nearly all foreign currencies, most notably the Brazilian reais, Canadian dollar and euro. For the segment's operating margin, our full year guide forecast is now between 1617%, also reflecting the impacts of currency fluctuations. Slide eight shows our forecast for the Small Ag and Turf segment.

We expect net sales to remain down around 10%. This guide now includes a 0.5 of positive price realization and 1.5 of negative currency translation. The segment's operating margin guide remains between thirteen percent and fourteen percent. Shifting now to Construction and Forestry on Slide 9. Net sales for the quarter declined roughly 38% year over year to $1,994,000,000 due to lower shipment volumes.

Price realization was negative by roughly one point. Currency translation was also negative by more than one point. Operating profit of $65,000,000 was down year over year resulting in a 3.3% operating margin due primarily to lower shipment volumes and sales mix as well as unfavorable price realization and higher SAG and R and D expenses. Lower shipment volumes were primarily due to planned underproduction to retail in the quarter as we reduced field inventory levels in our Earthmoving segment. Slide 10 describes our construction and forestry industry outlook.

Industry sales for Earthmoving equipment in The U. S. And Canada are expected to be down around 10%, while compact construction equipment in The U. S. And Canada is expected to be down 5%.

End markets remain sequentially unchanged in 2025 with equipment demand tempered by uncertainty across both construction and compact construction equipment. U. S. Government infrastructure spending remains at historically high levels, while single family housing starts continue to increase as a result of low levels of existing home inventory. These tailwinds are offset by subdued multifamily housing starts and a softening commercial real estate market as high interest rates continue to weigh on overall investment.

Additionally, earthmoving rental refloating remains at low levels. Global forestry markets are expected to be flat to down 5% as all global markets continue to be challenged. Global roadbuilding markets are forecasted to be roughly flat with strong end market demand persisting amid a return to more normal ordering seasonality. Moving to the C and F segment outlook on Slide 11. 20 20 five net sales remain forecasted down between 1015%.

Net sales guidance for the year includes flat net price realization and 1.5 points of negative currency translation. The segment's operating margin continues to be projected between 11.512.5%. Now transitioning to our Financial Services operations on Slide 12. Worldwide Financial Services net income attributable to Deere and Company in the first quarter was $230,000,000 Net income was favorably impacted by a decreased valuation allowance on assets held for sale of Banco John Deere. Note that Deere completed this transaction with Bradesco for the sale of 50% ownership in Banco John Deere subsequent to the quarter in February.

Excluding this special item, net income decreased due to a higher provision for credit losses, which was partially offset by lower SA and G expenses. For fiscal year twenty twenty five, our outlook remains at $750,000,000 as benefits from a lower provision for credit losses are partially offset by less favorable financing spreads. Finally, Slide 13 outlines our guidance for net income, effective tax rate and operating cash flow. For fiscal year twenty twenty five, our outlook for net income remains between $5,000,000,000 and $5,500,000,000 Next, our guidance now incorporates an effective tax rate between 2022% And lastly, cash flow from the equipment operations remains projected between $4,500,000,000 and $5,500,000,000 Note that during the quarter, we made a voluntary four zero one contribution of $520,000,000 to fund our salaried post retirement healthcare plan. This will impact our cash flows for the full year.

However, our guidance range remains unchanged. This concludes our formal comments. We'll now shift to a few topics specific to the quarter. Let's begin with Deere's performance this quarter. We saw net sales decline roughly 35% year over year and margins come in just under 8%, But we held the majority of our guides for the full year, notably net income.

Josh Beal, can you break down what happened this quarter and then walk through what this means for the rest of the year?

Sure, happy to. I think it's important to start with a few thoughts on what our plans were for the quarter. In North America large ag, our focus was continuing to work down used inventory levels, while returning to normal production and shipment seasonality, albeit at lower volumes this year due to the projected industry decline. In Brazil, we targeted further reduction in combine field inventory, which was the one product line where we still had a little more underproduction to do following the significant inventory declines we achieved across all product lines in 2024. Lastly, in Construction and Forestry, recall that our plan was to shut down North American earthmoving production for roughly half the first quarter, significantly under producing retail demand and positioning our field inventories well for the remainder of the fiscal year.

We feel great about the progress that we made across all three fronts. The plans that we executed, while contributing to the 35 year over year decline in sales that you mentioned, reflect our ongoing focus on proactively managing our business through this downturn. There were a few variances this quarter that caused sales to decline slightly more than we had anticipated, specifically the timing of shipments and currency translation. Within our Ag and Turf divisions, we saw the timing of certain product deliveries get pushed out into the second and third quarters as we work to optimize schedules for the full year. Similarly, in road building, a shift to more normal seasonality in that industry pushed some shipments into future quarters.

As a result, we expect to see these sales occur across the remainder of

divisions. Regarding currency, over the quarter, we saw mid single digit strengthening of the dollar against nearly all our foreign currency exposures. While this lowered our top line results, particularly in production and precision ag due to the translation impact on non U. S. Dollar sales, currency impact on operating profit was relatively minimal in the quarter due to currency hedges.

For the full year, the reduction in both our net sales and operating profit guides for large ag are primarily driven by currency changes as we extend the impact of the stronger U. S. Dollar to our rest of year projections, including our unhedged currency exposure in the latter quarters of the year. Shifting to cost management, we had a relatively strong quarter. In both of our Ag and Turf segments, we saw favorable production costs primarily due to reduced material costs and muted overhead headwinds.

Additionally, lower SA and G expenses this quarter reflect our focus and commitment to operational efficiency throughout the business. Turning to the full year guide, our market demand outlook remains relatively unchanged this quarter. Outside of the FX impacts that moved our PPA guide slightly lower, this quarter was really a story of continued production and inventory management. One last item of note, we did benefit from a favorable tax rate this quarter resulting from two non repeating discrete items totaling 163,000,000 Therefore, when netted against the negative currency impacts and other quarterly items, our full year net income forecast remains unchanged from our original 2025 guide.

Great. Thanks for that breakdown, Josh. So overall, it was really a quiet quarter once you back out the timing, FX and tax items. I guess moving then to the broader ag industry, I'd like to talk through farm fundamentals. The USDA just updated their 2025 forecast for net cash farm income.

While U. S. Net cash farm income is now forecasted to be up 22 year over year, crop cash receipts are still expected to fall 2% driven by lower commodity prices. The difference then would be the significant government support expected for farmers this year. Obviously, it's still early in the year, but this seems to be a somewhat positive proof point for our customers following a tough 2024.

Can you add any additional color to what this means for farmers and equipment demand over the rest of the year?

Yes, sure thing, Josh. Clearly a positive headline with forecast up year over year, but it's important to break down how we get to that point. There are a number of positive data points this quarter, keeping in mind this is all within the context of a trough level outlook for 2025. For starters, the recent rally in commodity prices has been fueled by both a cut in last season's U. S.

Yield forecast along with dryness in South America. Additionally, the USDA forecast for global ending stocks of corn, soy and wheat declined over 10% during the quarter as stocks to use retreated. This provides some benefit for our customers as they market last year's strong harvest. On the input side, farmers are continuing to see a decline in input costs for the third consecutive year. Further tailwinds this quarter came via $10,000,000,000 in additional U.

S. Support for farmers as you noted. This assistance will offset some of the margin decline farmers saw in 2024, while potentially helping to relieve concerns around macro risk and high interest rates. But ultimately, we don't expect this to translate into immediate order velocity as general uncertainty continues to persist and customers remain cautious across all markets.

This is Jeff. And I think the takeaway here is the additional support from government payments will help buffer downside risk to farmers' balance sheets as well as the overall industry outlook following a multi year decline in both farm net income and industry equipment demand.

Yeah, definitely, Josh. And if we look globally, Brazil is another geography where farmer sentiment continues to improve. Currency movement has been favorable as a weakening real helps improve farm net incomes in the country. This is because commodity sales are primarily U. S.

Dollar denominated, while typically around half of producer costs are in local currency. It's still too early to call a market shift there as we've yet to see this sentiment convert to a meaningful change in order velocity, but it's a positive sign nonetheless. Finally, turning to Europe, the continued favorability we've seen in dairy and livestock is now supported by moderately better wheat prices and slightly lower input costs. While markets overall remain contracted and pressured by lower yields and macro uncertainty, We've seen this improved sentiment translate to further stabilization in our order books.

Perfect. Thanks, Josh. Clearly, a dynamic global market, but overall sentiment seems to be improving a tinge. Now given this market backdrop, can you update us on the business and how we're managing through inventories and order books?

As we discussed earlier, this quarter has really been about executing the plan as we continue to manage through this downturn. Our setup entering 2025 was solid as the underproduction of retail that we executed last year drove down field inventories and positioned us well across the globe for another challenging year in terms of end market demand. As we walk around the world, let's start in North America. On the new inventory side, we ended the calendar year with large ag field inventory down 25% year over year and roughly 15% below pre-twenty twenty averages. In fact, we saw our two twenty horsepower tractor inventory decline by nearly twice as much as the industry over the past year, allowing us in partnership with our dealers to continue our focus on reducing used tractor inventory.

The industry backdrop remains challenged as we continue to expect demand declines across all large ag product lines in North America. Our combine early order program closed a couple of weeks ago and compared to last year's EOP was down more than our industry guide. Additionally, our rolling tractor order books continue to provide roughly five months of visibility as they're now full late into our fiscal third quarter. As a result, we're targeting to finish the year with new inventory in The U. S.

Roughly unchanged year over year, reflecting our plan to produce in line with retail demand in the region. Shifting our focus to North American used equipment, we're starting to see early proof points supporting the operational and marketing decisions we've made over the past few quarters. Here, high horsepower tractor used inventory peaked in November, and we've since seen two consecutive months of moderate unit declines along with compression in auction to asking price spreads. Notably, we've also seen two consecutive quarters of improvement in the percentage of late model equipment that makes up Deere's used high horsepower tractor population. Deere combined used inventory was up this quarter in line with normal seasonal build, but down over 10% from the recent peak in spring twenty twenty four and is currently sitting at around 60% of the prior cycle peak.

While progress has been made, normalizing used inventory levels in North America, particularly in high horsepower tractors, remains a top priority for the fiscal year.

This is Jepsen. Maybe one thing to add. I spent time last week with our dealer principals from The U. S, Canada, Australia and New Zealand. We have a high level of alignment and focus on reducing used inventories and we feel confident in how we collectively, Deere and dealers, have managed this downturn differently and note our more proactive response to get ahead of the market turning in 2024.

This enables them to continue investing in their ability to support customers' needs today and tomorrow.

hear that feedback from the channel. Now continuing outside The U. S, we're seeing some bright spots in Brazil as the work we put in last year to bring down inventory levels has also resulted in a return to production levels in line with the industry demand. As previously noted, the one exception is combines, where we had a little more work to do in the first half of this fiscal year. With Brazilian harvest in January, the end of the calendar year is typically our strongest combine selling season.

And to that end, we saw great progress in our combine inventory this quarter, with field levels down over 25% in the past three months and down nearly two thirds since the end of fiscal twenty twenty three. Along with improving customer sentiment in the region, our strategic focus on tech adoption has been met with strong customer interest. During the quarter, over 1,500 Precision Ag Essentials kits were ordered in Brazil, along with over 1,200 orders for JDLink Boost. Our Starlink supported satellite connectivity solution, which was just made fully available to the market for order a few weeks ago. We expect to see continued tech adoption in Brazil as connectivity expands within the region and customers are able to maximize the value of John Deere's Precision Ag Solutions and the John Deere Operations Center.

This is Josh again. One thing to add on top of

the great progress Beal noted is our continued focus on investing in Brazil for Brazil. During the past quarter, we officially opened our technology development center in the country, which we announced last year. This space will enable us to develop and deliver solutions specifically suited for Brazil's tropical agriculture environment. We also continue to enhance both dealer and customer support in Brazil. Brazilian Farmers are ramping up the horsepower curve while simultaneously integrating advanced technology and digital solutions into their operations.

We recognize this and are committed to supporting them on this journey. A quarter ago, we discussed the growth in engaged acres and highly engaged acres in South America. The combination of the equipment, technology and connectivity we're delivering will support further growth in these metrics and more importantly lead to better outcomes for our customers.

Okay. Let's shift now to Construction and Forestry, which had a few unique aspects this quarter. As you mentioned earlier, we discussed the roughly 50% production shutdown days we had planned in Earthmoving as we proactively work to reduce inventories and build order banks. Josh Beal, could you provide an update on how that turned out along with any broader market commentary for the year?

Yes, no problem, Josh. As you rightly noted, our first quarter in C and F was all about rightsizing inventories to ensure strong execution throughout the remainder of the year. To that extent, we underproduced retail demand by approximately 35% in the first quarter, resulting in an earthmoving inventory reduction of more than 15% over the past three months and nearly 30% in the prior two quarters combined. In fact, this was more than we had initially anticipated as retail sales for compact construction came in better than expected at the end of the calendar year. We're encouraged by these results as they provide us with operational flexibility as earthmoving demand evolves throughout the remainder of the year.

Turning to the broader industry, we remain focused on supporting sales in a highly competitive North America market. End markets remain strong with only around 50% of IIJA funds committed and equipment utilization reflecting the fact that construction employment is at record levels and continuing to rise. However, equipment purchases remain constrained given macro uncertainty and persistently high interest rates. That said, we found success with selective incentive programs targeting specific products to drive sales. Our road building business continues to bolster the C and F segment as road building is experiencing another year of strong market demand.

Tech investment and integration in this market continues to drive further customer value on top of an already robust value proposition. We are excited to showcase our latest innovations in road building at the upcoming Bauma Show in April. One final thought on the broader C and F segment. Headwinds from strong price competition and unfavorable currency impacts are putting pressure on sales. This has resulted in a point reduction to our net price realization forecast.

Although that negative margin impact is being offset by strong cost execution, leading to expectations for more favorable production costs this year than initially expected. It's important to note, however, that intra year we will see an atypical quarterly cadence as price actions taken in the first half of the year will moderate in the third and fourth quarter as we ramp production in the back half of the year.

That's great color, Josh. Good insight on the unique seasonality of the business this year. Okay, shifting gears now, the last topic I'd like to cover is tariffs. Obviously, a dynamic and rapidly evolving situation. What details can you provide on the issue, Josh?

Yes. I'd start by reinforcing the statement you made. The situation is certainly fluid and we continue to monitor changes in policy as they occur. Teams across the organization are continually running potential scenarios to understand risks along with opportunities to mitigate these impacts. But our primary focus remains on understanding how proposed tariffs may impact our customers' operations as we recognize their need for free and fair trade in ag commodities.

This allows them to concentrate on growing crops that feed, fuel and clothe the world. We remain committed to delivering the products and solutions they need to be productive and profitable as we've done for nearly two hundred years. Within Deere's business, first a reminder about our operational footprint. As you'll recall, we are a net exporter of Ag and Turf equipment from The U. S.

And more than 75% of our domestic U. S. Sales are assembled at U. S. Manufacturing locations.

Less than 5% of our U. S. Complete goods sales come from Mexico and of the remaining products produced outside The U. S, the majority come from Europe, notably our six Series tractors. From an export perspective, over half of our exports serve our Canadian customers with the remainder going to Europe, Brazil and Australia.

In terms of component sourcing, about 10% of our U. S. Manufacturing cost of goods sold come from Mexico, with less than 2% coming from China and approximately 1% from Canada. For the last several years, our teams have focused diligently on both supplier resiliency and cost management. The actions taken by our supply management team in response to pandemic disruptions such as dual sourcing, strengthening relationships with key suppliers are prime examples of the step function change our organization has made to build a more resilient and adaptable business.

This group works to manage and optimize our global trade flows, which position us well to navigate the current environment. And given the rapidly evolving nature of these tariffs, our guide does not contemplate the direct cost or economic benefit impacts resulting from potential future tariffs. It is important to know, however, that our exposure to the recently enacted China tariffs is expected to have an immaterial amount on our business.

Thanks, Josh. Great update. And before we open the line to questions, do you have any final comments you'd like to share?

Yes, certainly. The first quarter was reflective of the focus that we maintained as a business despite significant internal pressures ranging from weak end market demand, more competitive environment and macro uncertainty. Despite all the noise, we maintained discipline, executing to plan as we successfully brought down inventories while managing costs and operational expenses. We maintained our investment in the business, which continue to yield results as evidenced by our recent successes in Brazil, our autonomous solution announcements at CES last month and our upcoming product launches at Bauma in April. I'm as excited as ever about the value we're unlocking for our customers across the world.

We also returned over $800,000,000 in cash to shareholders through dividends and share repurchases during the quarter, reflecting the structural improvements we've made this cycle over last. I want to reiterate my utmost thanks to our entire team here at Deere, from employees to dealers to suppliers, It takes dedication and hard work from every facet of the business to demonstrate this level of discipline. And we'll continue to execute to plan as we manage throughout the rest of the year and across the cycle. We're as focused as ever on our steadfast commitment to our customers and we'll continue prioritizing investment in the most value added solutions for them. We'll continue to expand our precision offerings across both product lines and geographies, while ensuring we meet the basic needs of quality, uptime and productivity for our customers.

Our focus is solving our customers' toughest problems, so they can focus on what matters most, building critical infrastructure and growing the crops that feed, fuel and clothe the world.

Thanks, Josh. Now let's open it up to questions from

We're now ready to begin the Q and A portion of the call. The operator will instruct you on the polling procedure. In consideration of others and to allow more of you to participate in the call,

Our first question comes from Tim Tien from Raymond James.

Hi, good morning. Maybe just some help in terms of large ag production cadence given the push out that you called out for the first quarter. How do we think about kind of that normal seasonal ramp up that you typically see in the second quarter and third quarter? Is that can you just maybe just help us in terms of that going to be more weighted to the third quarter than usual? And just as we think about kind of segmenting the remaining quarters, this would be a PPA question?

Yes. Hey, Tim, thanks for the question. I mean, I think as you think about large ag demand and shifting some of those shipments out to future years, it's still going to more or less follow normal seasonality for the business. As we look at the second quarter, it's still we'd anticipate being the highest quarter for us in terms of sales. Full year guide for large ag being down 15% to 20%.

Quarter over quarter, we'd expect that second quarter year over year compared to last quarter or last year's quarter to be down more than the guide, so probably down more than the 15% to 20% that you're seeing in the full year. And that gets sequentially better as you go to Q3 and Q4 in terms of the year over year comps.

Yes. Tim, this is Josh Epsom. Maybe one thing I'd

add to. As you think about the sequence, you know, Bill laid out kind of how that plays out. I think for production precision ag as well as the rest of our businesses, we would expect fourth quarter we're actually growing year over year because of some of the comps and actions we took, but we actually start to see increases year over year as we get to 4Q as well. Thank you.

Our next question comes from Stephen Volkmann from Jefferies.

Hi, good morning guys. Thank you. I'm curious, I think one of you, Josh, has mentioned that the early order program was kind of below your industry forecast and obviously we saw some pretty weak numbers from AEM yesterday. And I'm just curious how you're thinking about sort of having confidence in the bottoming process for the end market activity because obviously that will drive what you need to do in the inventory side.

And maybe I'll talk combines and then walk a little bit around the other product lines as well. As you recall for North America, our guide for the industry is down 30%. If you kind of take product line by product line, sprayer EOP came in pretty close to that industry guide. We're expecting tractors to be a little down a little bit less year over year, row crop tractors. And then four wheel drive tractors will be a little bit more than the guide.

And then as you mentioned, given the results of the comment early order program, we'd expect that to be down a little more than the guide as well. So weighted to get to that industry down 30, but a little bit of difference by product line. Yes, as you saw in the quarter and this is consistent with the shipment timing that we talked about, the EOP for combines both a little more slowly this year than it has in the prior years and that resulted to a little bit slower ramp up for us in terms of combine shipments in Q1. I think that's reflective of the inventory levels that you're seeing for us.

talk about 11% inventory to sales for combines as it cools out in the quarter, that's a little lower than normal and really reflective of some of those delayed shipments. As you look to the full year, I think what gives us confidence is, as you know, the combine early order program typically represents 90 ish plus percent of what we're going to build in a year. So we have those orders locked in. It's just a matter of when we laid those in the schedules. And so pretty good visibility there.

Steve, this is Jeff. So maybe one thing to add on the used side. Combines we saw combines start to turn earlier. July of twenty twenty four was kind of where we saw the highest inventory level in combines and that worked down over the course of the year. We see a little bit of seasonal build there, but I think we were probably earlier on actions as it related to combines and feel good about the progress we're making to pull that down.

Our next question comes from Jerry Revich from Goldman Sachs.

Yes. Hi, good morning, everyone. I'm wondering if you could just expand

on the comments that you shared on the precision ag update you gave us, progress in Brazil. Can you just talk about globally expectations for ag essentials and seed sprayer kits for this year? What progress was like in the quarter? And also, if you wouldn't mind just updating us on the engaged and highly engaged acres, if you have that?

Yes, great. Thanks for the question, Jerry. Yes, I mean, Precision Ag Essentials, which recall, as we think about our tech stack, Precision Ag Essentials is really the foundation of the tech stack. It's those core elements of guidance of connectivity and high powered onboard compute. And the bundle that we've created with Precision Ag Essentials, a lower upfront cost and an annual subscription for that for the benefit of that technology.

I recall we introduced this package last year in 2024 in North America, really strong reception to that, about 8,000 units that we retailed. Average age of the equipment that those units were being put on was 2012, so we were going deeper in the fleet in terms of connecting people into the Deere ecosystem. So we were really encouraged this year. I think we had a limited release in Brazil in 2024 for Precision Ag Essentials, but more fully available in 2025. And we've been really encouraged by the results.

As I mentioned, over 1,500 orders year to date in Brazil for that Precision Ag Essentials base. On top of that, just in the January, we made our Starlink enabled JD Link Boost solution available in the region in Brazil. And recall, that connectivity is a big challenge for our customers in country there. We'd estimate about 70% of ag land in Brazil doesn't have sufficient sell. And we've seen really, really strong take rates early on in those couple of weeks since that ordering has opened up.

Deere (DE) Q1 2025 Earnings Call Transcript

Company Participants