John Deere, a leading original equipment manufacturer (OEM), has started its fiscal year 2026 on a high note, enhancing its full-year guidance. The success comes as robust sales in its small agriculture and turf, as well as construction and forestry sectors, counterbalance hurdles faced in its production and precision business, according to the first quarter (Q1) results ending February 1, 2026.

“Our results reflect the strength and resilience of a diversified portfolio across multiple end markets and geographies. All business segments reported higher net sales year-over-year, with both small ag and turf, along with construction and forestry, experiencing growth of over 20%,” stated Christopher Seibert, head of investor communications for John Deere, during the Q1 earnings call.

He further noted, “Our quarterly performance exceeded our expectations, largely due to shipping volumes that surpassed our original forecast. Over the quarter, we observed a notable strengthening of our order books across various product lines, especially in small ag and turf, as well as construction.”

Financial Highlights of Q1 2026

In Q1 2026, John Deere generated $9.611 billion in net sales and revenues, a significant increase from $8.508 billion in the same quarter of 2025. However, net income saw a decline from $869 million in Q1 2025 to $656 million in Q1 2026, attributed to rising costs of sales.

By business segment, the small agriculture and turf unit reported $2.168 billion in net sales for Q1 2026, up from $1.748 billion in the previous year. Similarly, the construction and forestry sector recorded $2.670 billion in net sales, compared to $1.994 billion YoY.

While the production and precision business faced challenges, its net sales still saw a modest gain, reporting $3.163 billion for the quarter compared to $3.067 billion in the prior year, despite a drop in operating margins from $338 million to $139 million.

In light of these results, John Deere has updated its full-year forecast for net income to between $4.5 billion and $5 billion, an increase from the previously projected range of $4 billion to $4.75 billion, indicating a strong start to 2026.

“Recent developments have reinforced our belief that 2026 represents the low point of the current cycle, with mid-single-digit net sales growth projected for our equipment operations this fiscal year,” Seibert added.

Impact of Tariffs on John Deere’s 2026 Outlook

Tariffs have significantly influenced John Deere’s operations in the past year, specifically the 232 steel tariffs, which cost the company approximately $600 million. For this year, John Deere forecasts a potential $1.2 billion tariff impact. However, the company anticipates a diminishing effect of tariffs moving forward. “It seems we have moved beyond peak uncertainty in North America, leading us to believe the market is stabilizing,” Seibert emphasized.

As the U.S. Supreme Court prepares to decide on the legality of the Trump Administration’s executive actions imposing tariffs, there exists the possibility of tariff refunds. Should this occur, John Deere plans to assess how these refunds will influence pricing strategies. Josh Beal, director of investor relations for John Deere, noted, “Similar to our previous approach last year with rising tariffs, we did not implement immediate price changes. A similar strategy can be anticipated for 2026.”