Deere forecasts weak annual profit as tariffs weigh on large-farm-equipment unit

Deere & Co DE-N -5.67%decrease
 forecast an annual profit below estimates on Wednesday, pressured by tariff impacts and weaker margins from its large tractors, sending the farm-equipment maker’s shares down 4 per cent in premarket trading.

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 from two of its other units that serve forestry and small agriculture markets.

The company, best known for its green and yellow tractors, gets nearly 50 per cent of its revenue from customers in the U.S., where weak crop prices and a shift to cheaper rentals have hurt demand for new farm equipment.

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

Deere expects its annual net income to be between US$4.00-billion and US$4.75-billion, below analysts’ estimates of US$5.33-billion, according to data compiled by LSEG.

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