John Deere released its second quarter (Q2) 2026 financial results on May 21, reporting double-digit declines in its production and precision agriculture business, while its small agriculture and turf and construction and forestry segments fared better, as the original equipment manufacturer (OEM) continues to feel the impact of geopolitics and a challenging ag economy on its business.
For its second quarter, ending May 3, John Deere reported $1.773 billion in net income, down 2% from the same quarter last year. Production and precision agriculture net sales declined from $5.230 billion in Q2 2025 to $4.503 billion in Q2 2026, with operating profits dropping 39% year-over-year.
Despite the declines, Deere generated $3.485 billion for its small agriculture and turf business in Q2 2026, growing 16% from the same quarter last year, the OEM reported. Additionally, the OEM’s construction and forestry business grew 29% with $3.790 billion in net sales in Q2 2026, compared to $2.947 billion for the same quarter last year.
“Our performance in the current market environment demonstrates the strength of our diversified portfolio. This is particularly reflected in the strong outcomes achieved by our small ag and construction & forestry divisions during this year. As we address ongoing challenges within global agricultural markets, our comprehensive portfolio continues to drive market share expansion and support our targets for sustained growth,” said John May, chairman and CEO of John Deere, in a press release.
Farming margins squeezed, but will 2026 be the bottom of the down-market cycle?
For the 2026 fiscal year, John Deere expects its U.S. and Canada large ag business to decline 15-20%, while South American tractors and combines to drop around 15%. Elsewhere, U.S. and Canada small ag and turf and European ag to be flat to up 5%, with Asia ag sales expected to be flat for the year.
Brazilian growers are under pressure due to a combination of high interest rates and rising inputs despite strong crop production and improving commodity prices, explained Josh Beal, director of investor relations for John Deere, in the Q2 earnings call. Brazilian growers are entering “a particularly sensitive point in their production cycle,” as they begin to plan their next crop, he added.
Despite market challenges in South America, John Deere is still tapping into demand for connectivity services and technology in Brazil through its JDLink Boost service, Beal explained. “We sold more than 12,500 JDLink Boost kits and achieved 25% growth since the last quarter alone,” he added.
“While farmers in other parts of the world have largely locked in inputs for this growing season, Brazilians have more exposure to current spot prices. Interest rates in the country remain high, and despite recent easing, expectations for additional cuts later in the year have been reduced, given the anticipated inflationary environment. At the same time, the strengthening of the [Brazilian] Real against the US dollar is adding incremental margin pressure for growers,” Beal elaborated.
Despite challenges to the broader ag economy, John Deere re-stated that 2026 will represent the bottom of the current cycle for ag machinery, as an aging fleet of machines will require capital investments.
“Our baseline view remains that 2026 will represent the bottom of the ag cycle. We’ve managed to field inventories tightly of new equipment and made significant progress on used. And all the while, machine hours continue to accrue, aging out the fleet and driving a base level need for replacement. The pace of recovery from that point on will, of course, depend on several factors, including geopolitical developments, underlying ag fundamentals, and policy outcomes,” Brent Norwood, CFO, said on the earnings call.
John Deere’s stock closed down on the day of the Q2 reporting at $531.35, declining 5.19% on the day.
