The mechanization sector will reach its lowest point in 2026. This is the view of John Deere CEO John May. Deere & Co. presented its quarterly and annual financial results at the end of November, revealing that the company's profit has fallen by almost a third this financial year. Other tractor manufacturers are also performing worse.
Deere & Co. achieved a net profit of $5,027 billion (€4,33 billion) for the full fiscal year 2025/26. The company has a split fiscal year, which ends in November. This result is 29% lower than in the previous fiscal year, when net profit was $7,10 billion. In the fourth quarter, net profit was $1,065 billion.
More turnover in fourth quarter
In the fourth quarter (August, September, October), the world's largest agricultural machinery manufacturer performed best. Net sales reached $12,39 billion, up 11% from the same quarter a year earlier. For the full fiscal year, sales fell 12% to $45,68 billion.
According to CEO John May, the company faced many uncertainties and challenges in 2025. "Due to differences in global markets and various segments, we were able to achieve a positive result in the fourth quarter," he explained during the figures presentation. May expects the bottom to be reached in 2026, in what he calls the 'large ag cycle'. "Our margins are under pressure due to tariffs and challenges within the agricultural sector. By focusing on inventory management, cost savings, and expected growth in the small segment (agriculture and golf courses) and forestry, we can manage the situation well."
Deere expects a significant decline in machinery sales, particularly in North America, with a 15% to 20% drop in sales of large tractors and machinery. A 5% decline is expected in Asia, and the situation is estimated to remain stable in Europe.
78% less profit at CNH
Earlier in November, CNH Industrial released its results. Net profit for the third quarter amounted to $67 million, compared to $310 million last year. This represents a significant 78% decline. The difference in revenue was smaller: $4,399 billion compared to $4,654 billion last year, a 5% decrease.
According to the company, the sharply lower profit is due to significantly reduced sales and inventory reduction. The latter remains the target for 2026. In North America, sales in the 140 hp and below category fell by 41% in the third quarter, and sales in the above category fell by 23%. The European market remained virtually unchanged, with only a 2% drop in sales. Globally, net sales in the agricultural segment fell by 10%.
CNH is absorbing smaller margins by cutting inventory and costs, which has been successful so far. Margins are particularly under pressure in North America and Europe. For 2025 as a whole, the company expects sales in the agricultural segment to fall by between 11% and 13%.
One-time benefits help Agco
Agco, the world's third-largest producer, presented its third-quarter results around the same time. These came to $2,5 billion in the third quarter, a 4,7% decrease compared to a year earlier. The sale of its Grain & Protein division somewhat obscures these results, generating a one-time gain of $251,2 million. Net sales in the first nine months of this year were down 18,4% compared to 2024. Agco also sold its stake in the Indian tractor manufacturer Tafe. This money will be used for a share buyback program in Agco itself, totaling $1 billion.
John Deere and CNH are making no bones about it: President Trump's policies are hurting them. Import tariffs, particularly on steel and other raw materials, are driving up the costs of new tractors, combines, and other agricultural machinery. Despite Trump's recent plea to American farmers to buy tractors and combines, his policies are having a very different impact in practice. John Deere is moving part of its production to Mexico and laid off another 300 employees in Iowa and Illinois at the end of November. In total, Deere & Co. has already laid off 2.100 employees this year, spread across eight locations, out of a total of 22.600 jobs it has in the US.
Production changes
Whether the company will escape the tariffs and higher costs remains to be seen. President Trump warned in September that he would impose a 200% surcharge on the green-and-yellow products if production were actually moved to Mexico. Employees, many of whom have worked for Deere for years, are also furious about the layoffs. Other manufacturers are also making choices based on Trump's policy. For example, Claas is now sourcing its combines from Germany for customers in Canada, instead of machines built in the United States (Omaha). The reverse is also possible. For example, machinery manufacturer Horsch is investing heavily in its American production facility, where machines are built that would otherwise be manufactured in Germany.
At CNH, they're not taking drastic measures; it's primarily a matter of "watching the pennies." The company has decided to cut back on its sales and administrative network, purchase more efficiently, and invest less in R&D. The tariffs on steel and aluminum imposed by the US in August have resulted in some production being relocated, with the costs being shared between CNH and its customers. This has increased the cost of machinery, while profits have declined.