After three straight quarters of sales declines, John Deere has reported a strong finish to its fiscal year 2025 construction equipment business despite paying $600 million in tariff expenses.
Construction net sales were up 27% year-over-year in Deere’s fourth quarter to $3.4 billion, versus $2.7 billion in last year’s fourth quarter. Deere said this was primarily driven by higher shipment volumes.
Construction operating profit was also up, rising 6% year-over-year to $348 million, due mostly to a $235 million increase in shipment volumes/sales mix. This offset a $32 million loss in price realization (the net difference between equipment's listed price and the actual selling price) and a $125 million increase in production costs driven by rising tariffs.
Director of Investor Relations Josh Beal said during the earnings call that fourth-quarter construction equipment retail sales were up mid-single digits, though they were offset by a year-over-year drop in compact construction equipment sales.
Looking at the full fiscal year 2025, construction net sales were down 12% to $11.4 billion, while construction operating profit was down 49% in the same period to $1 billion.
Speaking during the earnings call, Manager of Investor Communications Chris Seibert said 2025 was a demanding year for Deere’s construction and forestry segment, “as we faced increased competitive price pressure and the highest level of tariff exposure among our business units.”
Seibert added the company has seen positive trends in its construction retail performance and order intake and expects a slight improvement in industry demand in 2026.
Total net sales among all Deere’s segments were up 11% year-over-year in the fourth quarter to $12.4 billion but were down 12% for the full fiscal year to $45.7 billion. Net income was down 14% in the fourth quarter to $1.1 billion and down 29% for the full year to $5 billion.
For its 2026 full fiscal year, Deere forecasts its construction and forestry equipment net sales will be up around 10% year-over-year, and construction price realization is forecast to increase 3%.
John Deere’s total fiscal year 2026 net income is forecast at $4 billion to $4.75 billion, and the company expects a pre-tax direct tariff expense of around $1.2 billion, double the $600 million in 2025.
