Deere Finishes 2024 Fiscal Year with CE Sales Down 12%, Continues Underproduction

At just under $13 billion, John Deere’s construction net sales for its full 2024 fiscal year have come in 12% below last year’s following notably lower shipment volumes.

A breakdown of Deere’s fourth quarter construction operating profit, which totaled $328 million, showed sales volume was down $312 million compared to last year’s fourth quarter. This was partially offset by $67 million in savings on production costs. Fourth quarter construction net sales were down 29% to $2.7 billion.

For its 2025 fiscal year, Deere is forecasting its construction and forestry segment net sales will be down 10-15%, which would represent net sales of roughly $11.0-11.7 billion.

“Fixed end markets in 2025 are expected to temper equipment demand across both construction and compact construction equipment,” said John Deere Manager of Investor Communications Josh Rohleder during the earnings call. “Modest growth in single-family housing starts and U.S. government infrastructure spending will be more than offset by further slowdowns in multifamily housing developments, still softening nonresidential building investments and muted CapEx spending in oil and gas.

“Additional headwinds from historically low levels of earthmoving rental re-fleeting and somewhat elevated used inventories will further pressure equipment sales as market uncertainty persists into the start of fiscal 2025.”

Josh Beal, Deere’s director of investor relations, said during the earnings call that their construction customers’ backlogs were still healthy, though there’s less appetite for new machines.

“Our customers continue to see a strong backlog of work, albeit alongside stiffer competition, which is driving down bids and overall project margins compounded by elevated interest rates and a recently re-fleeted rental industry, there's less near-term appetite for new equipment purchases,” said Beal. “Despite these pressures, it's worth reiterating that we continue to see a robust utilization of equipment in the field.”

Beal went on to say Deere planned to continue under-producing its construction equipment through the first half of 2025, saying first quarter production days for its earthmoving equipment will be cut in half. He added the company’s decision to under-produce earthmoving retail demand in its fourth quarter succeeded in driving down dealer inventories.

“Given the additional softening in retail demand that we're anticipating in 2025, we've made the decision to continue to underproduce retail in the first half of next year to ensure inventory levels are appropriately sized to respond to demand changes in the back half of 2025,” said Beal. “In fact, much like large ag this past quarter, earthmoving lines at our North American factories will be shut down for approximately half of the total production days in the first quarter of the year.”

Total net sales were down 28% in the fourth quarter to $11.1 billion and down 16% in the full fiscal year to $51.7 billion.

Deere estimated its third quarter 2024 salaried employee-separation programs generated $165 million in pretax expenses. For its 2024 fiscal year, Deere recorded a $22 million total operating profit decrease from the separation program in its construction and forestry segment specifically.

This year, John Deere also implemented a series of layoffs at its manufacturing facilities.