🚜Deere & Co: Solid cost management helps in tough times!
Deere & Company $DE, the global leader in agricultural equipment, has proven that even in an uncertain environment, it is possible to exceed market expectations. In the second quarter, the company delivered better numbers than analysts had estimated, but lowered the lower end of its annual profit outlook. Shares responded by rising by more than 3 % and this year, they've earned more than 22 %!

🔍 Current challenges
Farmers are facing a lot of pressure due to high interest rates and low crop profits. As a result, demand for new equipment is down. Instead of buying, they often choose to rent machinery, which reduces sales revenue from heavy equipment such as tractors and combines.

Deere has responded exactly as any efficiently run company should: cutting costs, optimizing production and working carefully with inventory. This allowed it to beat profit expectations even though total sales were down year-over-year by 18 % to $11.17 billion.

💰 Earnings and outlook: clear signals of caution
Q2 net profit: $1.8 billion (last year: $2.37 billion)

Earnings per share: $6.64/share ($8.53 last year)

Revenue: $11.17 billion (analysts expected $10.8 billion)

Expected net income for the full year:

USD 4.75-5.5 billion (previous guidance: USD 5-5.5 billion)

The change in outlook is not dramatic, but suggests caution in expectations for the second half of the year. The company is preparing for external pressures such as weak demand, higher funding costs and geopolitical uncertainty to continue throughout the year 2025.

⚠️ Negative impact of tariff policy
The Company has indicated that it expects tariff costs in excess of US$500 millionin 2025. Chief Executive Officer John May emphasized that the company is approaching the uncertainty "judiciously", but also confirmed that tariffs "has fundamentally changed the global dynamics of their business".

🏗️ Strategic Investments
Despite the adverse environment, the company has not stopped thinking strategically. It has announced a plan to invest $20billion in the US over the next decade. This clearly shows confidence in the long-term growth of the US economy and domestic industrial self-sufficiency.

Deere & Company is not in an easy situation, but the company is showing it can find a way under pressure. In the long run, its strategic tenacity and ability to weather tough times may be what makes it an interesting investment.

What do you think of the company?