John Deere Financial earnings rise on wider spreads

Wider financing spreads boosted John Deere Financial’s earnings in its fiscal third quarter, helping the company overcome lower revenue and a smaller portfolio as Deere raised the captive’s full-year profit outlook. 

Finance and interest income fell 5.1% year over year to $1.4 billion in the quarter that ended Aug. 2, according to Thursday’s earnings release. 

Financial Services earnings benefited from “favorable price financing spreads,” partially offset by the smaller portfolio, Manager of Investor Communications Dan Pooley said during Deere’s earnings call today. 

By the numbers 

• Financial Services net income increased 6.8% YoY to $219 million;  

• Revenue declined 3.3% to $1.37 billion; 

• Year-to-date credit-loss provisions fell 14.2% to $206 million; 

• Net financing receivables, including securitized receivables, decreased 5.3% YoY to $49.1 billion; and 

• Parent company Deere’s quarterly revenue increased 4.9% YoY to $12.61 billion, equipment net sales rose 6.2% to $11 billion and net income climbed 7% to $1.38 billion. 

Market outlook 

While ag market conditions remain tight, Deere expects a stronger 2027, Agriculture and Turf President Deanna Kovar said during the earnings call. 

“We have proactively adjusted production levels and are modestly underproducing retail demand in the region, positioning both Deere and our dealers with healthy inventory levels as we enter fiscal 2027,” she said.  

“Modest improvements in interest rates during the quarter, combined with the Move Agriculture financing program, should improve access to capital and help create a more supportive environment for equipment investment as we look ahead to 2027.” 

Editor’s note: Equipment Finance News reached out to Deere & Co. about the “Move Agriculture” financing program but did not hear back in time for publication. 

Deere raised its Financial Services net income forecast to approximately $870 million from $860 million, according to the earnings release.  

The company also increased the lower end of its consolidated net income outlook to $4.75 billion from $4.5 billion, maintaining the upper end at $5 billion. 

Shares of Deere & Co. [Nasdaq: DE] were trading at $620.94 at market close today, up 6.94% or $40.31 from market open. Deere has a market capitalization of $167.61 billion. 

Check out our exclusive industry data here.