Deere’s construction and forestry unit made $436 million in operating profit last quarter, up 84% from $237 million a year earlier. Its agriculture business went the other way. That split, reported Aug. 20, is the clearest read yet on which end of the equipment market is actually working in 2026.
Construction and forestry margins nearly doubled
Net sales in construction and forestry hit $3.618 billion for the quarter ended Aug. 2, up 18% from $3.059 billion. Operating margin went from 7.7% to 12.1%. Deere credits higher shipment volumes and favorable price realization for the sales gain, and price realization alone for most of the profit gain, partly offset by higher selling, administrative and R&D spend.
Production and precision ag ran the opposite direction: net sales of $3.998 billion, down 6%, with operating profit down 9% to $527 million. Company-wide, Deere earned $1.379 billion, or $5.10 a share, against $1.289 billion and $4.75 a year ago, on revenue of $12.608 billion.
Full-year guidance says this isn’t a one-quarter blip
Deere raised the low end of its FY2026 net income range to $4.75 billion to $5.00 billion and put construction and forestry segment sales up about 20% for the year, with roughly 3% price realization. Its industry outlook has U.S. and Canada construction equipment up 5% to 10%, compact equipment up about 5%, and global roadbuilding up about 10%. Global forestry is down about 10%. Large ag in the U.S. and Canada is down 15% to 20%.
CEO John C. May said the company continues “to believe 2026 will mark the bottom of the current ag equipment cycle.” Tariff recoveries added $110 million in the quarter and $382 million over nine months.
What a contractor should take from the equipment numbers
Price realization doing the heavy lifting means fleet costs are still climbing, and a dealer quoting a 2027 delivery has pricing power he didn’t have two years ago. Roadbuilding up 10% globally is consistent with what heavy-civil contractors are seeing in bid volume on jobs like the Kentucky Lock Addition, where the approach-wall, electrical and mechanical packages still haven’t been let.
One caution on how this got reported. Reuters framed the construction strength as driven by an AI construction boom. Deere’s own release doesn’t say that. It says volumes and price. The data center demand story is real, but it isn’t Deere’s claim, and compact equipment up only about 5% doesn’t look like a market being pulled by hyperscale sitework.