Deere & Company’s construction equipment business delivered the strongest results in the company’s portfolio last quarter, with operating profit in its Construction & Forestry segment up 84% year over year — a data point that says more about where U.S. building activity is happening than most housing indicators do.
The Moline, Ill.-based manufacturer reported fiscal third-quarter net income of $1.379 billion, or $5.10 per diluted share, on Aug. 20. That is up 7% from $1.289 billion, or $4.75 per share, a year earlier. Worldwide net sales and revenues rose 5% to $12.608 billion.
Construction and forestry led the quarter
Construction & Forestry net sales reached $3.618 billion, up 18% from $3.059 billion in the same quarter of 2025. Segment operating profit climbed to $436 million from $237 million, lifting the operating margin to 12.1% from 7.7%.
Deere attributed the increase primarily to higher shipment volumes and favorable price realization.
The contrast with the company’s agricultural businesses is sharp. Production & Precision Ag sales fell 6% to $3.998 billion, with operating profit down 9% to $527 million. Small Ag & Turf was the other bright spot, with sales up 12% to $3.383 billion and operating profit up 28% to $622 million. Financial Services operating profit rose 7% to $219 million.
For the first nine months of fiscal 2026, Deere reported net sales and revenues of $35.589 billion, up 7%, but net income of $3.808 billion, down 4% from $3.962 billion. Nine-month diluted earnings per share came in at $14.06, down from $14.57.
Deere expects construction equipment demand to keep growing
The company’s industry outlook for fiscal 2026 projects U.S. and Canada construction equipment sales up 5% to 10% and global roadbuilding up roughly 10%. Global forestry is expected to decline about 10%. U.S. and Canada compact construction equipment is forecast up roughly 5%.
Deere forecast full-year net income of $4.75 billion to $5.00 billion.
Chief Executive John C. May framed the quarter around execution rather than any single end market. “Deere delivered a strong quarter, reflecting disciplined execution by our teams and continued resilience across our portfolio,” he said.
May added that results were “supported by stable U.S. market conditions, our ability to manage softer conditions in Brazil and Europe, and our commitment to helping customers succeed.”
On the outlook, he said: “As we look ahead, we continue to believe 2026 will mark the bottom of the current ag equipment cycle. Across our business, early order program trends, improving used-equipment inventories, and increasing customer adoption of our advanced technologies give us confidence that Deere is well positioned for long-term value creation.”
What it means
The verified facts are Deere’s reported figures: an 18% sales increase and an 84% operating profit increase in construction and forestry, alongside a company outlook calling for continued growth in North American construction equipment and roadbuilding.
May’s comments are the company’s own characterization and are framed around agriculture, not construction. Deere did not attribute the segment’s performance to any specific category of building.
RealtyWire’s analysis is that equipment demand of this kind is a downstream read on nonresidential and infrastructure work rather than housing. Dodge Construction Network reported this week that total construction starts rebounded 25.6% in July on data center and semiconductor megaprojects, while residential starts remain down for the year. Earlier, nonresidential starts hit a one-month record in June on a separate data series.
An 84% jump in construction equipment operating profit is difficult to reconcile with a housing-led construction market. It is straightforward to reconcile with heavy civil, industrial and data center work. That inference is ours, not Deere’s, and the company’s disclosures do not break out end markets in a way that would confirm it.
What to watch
Deere’s fiscal year ends in late October, so its fourth-quarter report will be the first full-year confirmation of whether the 5% to 10% construction equipment growth forecast held.
The more consequential question for developers and contractors is pricing. Deere cited “favorable price realization” as a driver of segment results, meaning equipment costs are rising for the firms that buy it. Combined with labor cost trends and the sustained pull of large nonresidential projects on crews and machines, that points toward continued cost pressure on smaller residential builders competing for the same equipment.
