Deere & Company reported second-quarter fiscal 2026 net income of $1.773 billion, or $6.55 per diluted share, for the three months ended 3 May 2026.
The result fell modestly short of the prior-year quarter — when Deere earned $1.804 billion ($6.64 per share) — but comfortably exceeded analyst expectations, which had been centred around $5.70 per share.
Worldwide net sales and revenues rose 5% year-on-year to $13.37 billion, ahead of the consensus estimate of approximately $11.56 billion.
For the first six months of the fiscal year, revenues are up 8% to $22.98 billion. Equipment net sales for the quarter were $11.78 billion, fractionally below one estimate of $11.88 billion.
A one-time boost helped the result: Deere recorded a $272 million recovery related to refund claims for IEEPA tariffs, following a February 2026 US Supreme Court decision that invalidated tariffs imposed under the International Emergency Economic Powers Act.
Management noted all three business units benefited from this lift.
Q2 FY2026 — Headline Financials vs. Estimates
| Metric | Result |
| Net Income | $1.773 billion |
| EPS (Reported) | $6.55 |
| EPS (Analyst Estimate) | $5.70 – $5.87 |
| Beat vs. Consensus | +$0.68 – $0.85 per share |
| Worldwide Net Sales & Revenue | $13.37 billion (+5% YoY) |
| Equipment Net Sales | $11.78 billion |
| H1 FY2026 Revenue (YTD) | $22.98 billion (+8% YoY) |
| Financial Services Net Income | $190 million |
| FY2026 Net Income Guidance | $4.5 – $5.0 billion (unchanged) |
Source: Deere & Company Q2 2026 Earnings Release and Earnings Call Transcript, 21 May 2026
Segment Breakdown: A Tale of Three Cycles
Deere’s three operating segments are moving in distinctly different directions — a pattern CEO John May described plainly: large agriculture is operating below trough levels, small agriculture and turf is progressing toward mid-cycle, and construction and forestry is slightly above mid-cycle.
All three, however, are delivering double-digit operating margins.
Q2 FY2026 — Segment Performance Summary
| Segment | Net Sales Q2 2026 | YoY Change | Op. Profit Change |
| Construction & Forestry | $3.79 billion | +29% | +48% to $561M |
| Small Ag & Turf | $3.49 billion | +16% | +25% |
| Production & Precision Ag | $4.50 billion | -14% | -39% to $706M |
Source: Deere & Company Q2 2026 Earnings Release, 21 May 2026
Construction & Forestry — The Star of Q2
The Construction & Forestry (C&F) segment was unambiguously the standout performer of the quarter.
Net sales jumped to $3.79 billion — a 29% year-on-year gain — driven by increased shipment volumes and improved price realisation.
Operating profit surged 48% to $561 million, reflecting both operating leverage and the strong demand environment.
Management raised full-year C&F net sales guidance to approximately 20% growth year-over-year and increased the segment’s full-year operating margin projection to between 10% and 12%.
The order book has expanded by more than 60% since November 2025 and is now at its highest point since April 2024, with over 80% of full-year production slots already committed.
The demand drivers cited by CFO Brent Norwood are broad-based: infrastructure spending across multiple geographies, a strong rental market, and an accelerating wave of data centre construction.
On data centres specifically, management noted that global spending is expected to exceed $100 billion in 2026, with additional double-digit growth projected into 2027 — creating demand not only for large-scale site preparation but also for utility and water contractors supporting these projects.
Road building is also performing well, with the global road building market now expected to grow approximately 10% year-over-year.
| Construction & Forestry net sales jumped 29% to $3.79 billion in Q2 2026 — operating profit surged 48% as data centre and infrastructure spending drive equipment demand. |
Small Agriculture & Turf — Recovering Toward Mid-Cycle
Small Agriculture & Turf posted a 16% revenue increase to $3.49 billion, with operating profit expanding 25%.
Management described this segment as progressing toward mid-cycle, reflecting a recovery in turf and compact equipment markets that had previously lagged the large-ag downturn.
Production & Precision Agriculture — Still in the Trough
The Production & Precision Agriculture unit — Deere’s largest segment historically and the core of its large-scale farm equipment business — saw net sales contract to $4.50 billion, down 14% year-on-year, as lower shipment volumes and rising production costs squeezed results. Operating profit fell 39% to $706 million.
Management attributed the weakness to persistently low farm profitability, elevated input costs, high interest rates, and ongoing trade-related uncertainty weighing on farmer purchasing decisions.
Despite the decline, management maintained its view that fiscal 2026 represents the cyclical bottom for large agriculture, with recovery expected to begin in 2027.
Revenue for the full year is expected to be slightly higher in the second half, with Q4 projected to outperform Q3 due to the timing of large tractor shipments.
Tariff Headwinds — and a $272 Million Windfall
Tariff management was a notable theme on the earnings call. Deere benefited from a $272 million one-time recovery after the US Supreme Court in February 2026 struck down tariffs imposed under the International Emergency Economic Powers Act.
The company had filed refund claims that have since been accepted by US Customs.
Looking ahead, approximately 80% of equipment sold in the United States is also manufactured domestically, which management cited as a structural buffer against ongoing tariff exposure.
Deere expressed confidence in its ability to manage through the current tariff environment while maintaining nearly 17% equipment operating margins across the business.
Full-Year FY2026 Outlook: Guidance Unchanged, Q4 Expected to Be the Strongest Quarter
Deere maintained its full-year net income guidance in the range of $4.5 billion to $5.0 billion.
Management expects to grow the top line by more than 5% for the full year, incorporating 2.5 percentage points of favourable price realisation and approximately 2 percentage points of favourable currency translation.
Revenue is projected to be slightly higher in the second half of the fiscal year, with Q4 anticipated to be the strongest quarter due to the timing of large tractor deliveries. The construction segment’s full-year operating margin is now guided at 10% to 12%.
FY2026 Full-Year Guidance Summary
| Item | Guidance |
| Net Income | $4.5 – $5.0 billion |
| Full-Year Revenue Growth | >5% |
| Price Realisation (contribution) | +2.5 percentage points |
| Currency Translation (contribution) | +~2 percentage points |
| C&F Net Sales Growth | ~+20% |
| C&F Operating Margin | 10% – 12% |
| Road Building Market Growth | ~+10% YoY |
| Global Forestry Market | -5% |
| US/Canada Earthmoving Equipment | +~5% |
| Ag Cycle Bottom | FY2026 (recovery from 2027) |
Source: Deere & Company Q2 2026 Earnings Call, 21 May 2026
Stock Reaction: Why a Beat Triggered a Sell-Off
Despite clearing analyst forecasts on earnings per share and revenue, Deere’s stock fell more than 5% in Thursday trading — a counterintuitive reaction that analysts attributed to several factors: ongoing uncertainty about the depth and duration of the agricultural downcycle; investor concern that the tariff refund inflated the headline beat; and broader market caution around equipment manufacturers exposed to global trade dynamics.
The stock’s reaction illustrates the gap between short-term market sentiment and underlying operational performance.
Deere is delivering double-digit margins across all segments, growing its construction business at a 29% clip, and maintaining a stable full-year guidance range — metrics that suggest financial discipline rather than distress.
| Deere shares fell 5%+ despite beating estimates — a reminder that in a volatile macro environment, even strong results can be punished if forward uncertainty lingers. |
Relevance for Africa’s Construction and Equipment Sector
For contractors, fleet managers, and equipment distributors operating across Africa, the Deere Q2 2026 results carry several practical implications.
- Construction equipment availability may tighten: With over 80% of C&F production slots for 2026 already spoken for and order backlogs at a two-year high, African buyers should engage regional dealers early for 2026–2027 delivery windows.
- Infrastructure tailwinds align with Africa’s project pipeline: The demand drivers Deere cited — road construction, large infrastructure projects, and data centre development — are all active themes in South Africa, Kenya, Nigeria, and Egypt. African contractors are well positioned to benefit from the same equipment innovation cycle.
- Ag equipment buyers may find pricing flexibility: The large-ag downturn — characterised by reduced factory shipments and dealer inventory management — historically creates negotiating room for buyers in a soft market. For African commercial farmers purchasing at scale, 2026 may represent a strategic window.
- Watch Q3 FY2026 results in August: Deere reports next in August, coinciding with the anticipated availability date for the new S7 combine and 540-series tractors launched at Nampo 2026. That report will confirm whether the construction momentum is sustained and whether the ag recovery trajectory is on schedule.
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| Meta Description | Deere & Company Q2 2026 earnings: $6.55 EPS beats estimates, Construction & Forestry surges 29% as ag downcycle weighs. Full segment breakdown and Africa implications. |
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