Its shares climbed 8.1 per cent in morning trading.

The world’s largest farm-equipment maker previously scaled back factory production to counter weak demand for new machinery as lower crop prices and higher input costs push farmers to postpone big-ticket purchases.

The company is also working closely with dealers across its network to reduce inventory.

Construction, small agriculture demand recovering

It expects net income for 2026 to range between $4.5 billion and $5 billion (C$6.16 billion and C$6.85 billion) compared with its prior forecast of $4 billion to $4.75 billion. Analysts on average expect Deere to post full-year net income of $4.45 billion, according to data compiled by LSEG.

“We’re encouraged by the ongoing recovery in demand within both the construction and small agriculture segments,” CEO John May said.

“These positive developments reinforce our belief that 2026 represents the bottom of the current cycle.”

Deere now expects 2026 net sales in two segments — Small Agriculture & Turf and Construction & Forestry — to rise about 15 per cent each compared with its earlier forecast for a roughly 10 per cent increase.

Oppenheimer analyst Kristen Owen said the company ended the quarter with relatively lean inventories, building historically less stock in the fourth and first quarters and leaving room for a potential upside as inventory normalizes through the year.

Deere posted net income of $656 million (C$898.7 million), or $2.42 per share, for the quarter, down from $869 million, or $3.19 per share, a year ago, but above analysts’ estimate of $2.05 apiece.

It’s first-quarter revenue rose 13 per cent to $9.61 billion (C$13.16 billion).

Tariffs drag, farm income remains weak

U.S. President Donald Trump’s sweeping tariffs have weighed on Deere’s operating profits. The Moline, Illinois-based firm has struggled with higher, tariff-driven production costs as it relies significantly on imported raw materials to manufacture its green and yellow tractors.

U.S. farmers are heading into another season of weak crop prices and elevated costs, forcing tough decisions about how, or if, to continue operating as ample grain supplies pressure markets.

The U.S. Department of Agriculture earlier this month forecast net farm income — a broad measure of profitability in the agricultural economy — to fall 0.7 per cent to $153.4 billion (C$210.14 billion) in 2026 from a year ago.

Deere expects a pre-tax tariff hit of around $1.2 billion in fiscal 2026.

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The Basildon, UK-based company expects 2025 adjusted earnings to be in the range of 65 cents to 75 cents per share, missing analysts’ estimates of 85 cents per share, according to data compiled by LSEG.

The company said it continues to produce fewer units than the retail demand to reduce elevated inventory levels at its dealers. CNH exited its third quarter with $1 billion to $1.5 billion in excess dealer inventories, it said in its previous earnings call.

It expects sales in its agriculture segment to be down between 13 and 18 per cent year-over-year, while sales in the construction segment is expected to fall between 5 and 10 per cent.

The forecast comes days after peers Deere DE.N and AGCO AGCO.N released their full-year forecasts, which also failed to impress Wall Street.

Farm equipment demand remains subdued due to falling farm incomes globally, forcing farmers to rethink their big-ticket purchases, leading to higher inventories at dealerships and moderation in restocking efforts.

CNH, famous for its Case IH and New Holland brand of tractors, reported quarterly net sales of $4.88 billion, down 28% from the same period last year, but beats analysts’ estimates of $4.51 billion.

The company, formed through the merger of Fiat Industrial and CNH Global in 2013, reported quarterly adjusted profit of 15 cents per share, missing estimates of 18 cents per share.

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A sharp drop in crop prices coupled with rising production costs have lowered farm incomes around the world, forcing farmers to rethink purchasing heavy equipment, thus setting a gloomy demand environment for agriculture equipment makers.

CNH now expects its full-year adjusted profit to be in a range of $1.30 to $1.40 per share, compared with $1.45 to $1.55 per share previously.

The Basildon, UK-based company now expects its agriculture segment net sales to be down between 15 per cent and 20 per cent year-over-year, compared with a fall of 11 per cent to 15 per cent expected previously.

“Our view is that the current down-cycle is likely to extend into 2025 given the current commodities backdrop and the impact on farmer economics globally,” Oppenheimer analyst Kristen Owen said.

U.S. farmer income, a broad measure for farm profitability, is expected to fall about 25 per cent to $116 billion, from $156 billion in 2023.

Still, robust pricing and job cut initiatives undertaken by the company have helped it top revenue estimates in the quarter even as demand remains subdued in an industry-wide downturn.

The company reported a 16 per cent fall in second-quarter revenue to $5.49 billion, but beat analysts’ estimates of $5.32 billion, according to LSEG data.

Shares of the company were up 2.1 per cent in morning trade.

On an adjusted basis, the company earned 38 cents per share, slightly above analysts’ estimates of 37 cents.

“We will continue to manage the business prudently through 2024 while positioning ourselves for 2025,” CEO Gerrit Marx, who took over CNH’s helm on July 1, said in a statement.

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