(Reuters) -Farm-equipment maker Deere & Co reported a lower third-quarter profit and tightened its annual profit forecast on Thursday, pressured by headwinds from U.S. tariffs and muted demand. Shares
Deere Faces Increased Tariff Impact Amid Declining Quarterly Profits
Deere's Financial Performance and Tariff Challenges
By Nathan Gomes
Impact of Tariffs on Profit
(Reuters) -Deere & Co reported a drop in third-quarter profit on Thursday and warned of a bigger tariff hit than previously expected, sending shares of the farm-equipment maker down 7% in morning trade.
Market Response and Future Projections
U.S. President Donald Trump's sweeping tariffs have impacted companies across sectors, especially the manufacturing and industrial firms that rely significantly on imported raw materials.
Cost-Saving Measures and Inventory Management
This has added to the woes of farm-equipment makers who were already grappling with slow demand due to a slump in crop prices for wheat, corn and soybeans in North America and farmers opting to rent machinery instead of buying.
Analyst Expectations
The company now expects a pre-tax tariff impact of nearly $600 million for the year, compared with $500 million projected last quarter.
"Tariff uncertainty and deflated commodity prices have made farmers increasingly cautious in spending decisions and more hesitant to accept higher machinery prices," said CFRA Research analyst Jonathan Sakraida.
In the third quarter, the levies cost the company nearly $200 million, as tariff policies shifted quickly.
Despite the gloomy demand environment, Deere CEO John May said the company was able to manage its inventory levels to help production match retail demand.
The company's cost-saving measures also helped it top analyst estimates for third-quarter profit and revenue.
LOWER MARGINS
Third-quarter operating profit from two of Deere's largest units, which produce tractors, combines and construction equipment, roughly halved from a year earlier.
The company cut the higher end of its annual profit forecast to $5.25 billion from $5.50 billion, but kept the lower end intact at $4.75 billion.
Global companies that reported between July 16 and August 8 projected a combined financial hit of $13.6 billion to $15.2 billion for the full year, a Reuters' tariff tracker shows.
Trump has said the tariffs are a response to persistent U.S. trade imbalances and declining manufacturing power, and that the moves will bring jobs and investment to the nation.
Deere's net income in the third quarter came in at $1.29 billion, or $4.75 per share, compared with $1.73 billion, or $6.29 per share, a year earlier.
Analysts on average had expected the company to report a quarterly profit of $4.63 per share, according to data compiled by LSEG.
The company's net sales fell about 9% to $10.36 billion from a year ago, more than analysts' estimates of $10.31 billion.
(Reporting by Nathan Gomes in Bengaluru; Editing by Shinjini Ganguli)
