Deere & Company (DE): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed view of Deere & Company's strategic position as of late 2025, and the BCG Matrix is defintely the right tool to map where capital should flow. Honestly, the picture is complex: we have Construction & Forestry sales surging 27% in Q4 alongside a Financial Services unit netting $890 million, clearly marking them as future powerhouses. Still, the core business faces a cycle trough, and one segment saw profits plummet 89% last quarter, making tough calls necessary. Dive in to see which assets are the Stars demanding investment and which are the Dogs we need to manage out.

Background of Deere & Company (DE)

You're looking at Deere & Company (DE) right now, and honestly, the picture is a bit mixed as we close out late 2025. Deere & Company is the global leader when it comes to agricultural equipment, and they're also a major player in construction machinery. For context, the company operates through four main reporting segments: Production & Precision Agriculture (PPA), Small Agriculture & Turf (SAT), Construction & Forestry (CF), and its captive finance arm, Financial Services (FS). The PPA business is, by far, the biggest engine for both sales and profit, though it's facing the most immediate headwinds.

Let's look at the full fiscal year 2025 numbers, because that tells the real story of the year you just finished. Total net sales and revenues for fiscal 2025 came in at $45.68 billion, which was actually a 12% drop compared to fiscal 2024. Net income reflected that pressure, falling 29% year-over-year to $5.03 billion. Still, the equipment operations managed an operating return on sales of 12.6% for the year, showing some underlying strength despite the environment.

When you drill down into the fourth quarter of 2025, the top line looked better on the surface; total net sales were $12.39 billion, an 11% increase YoY, driven by a 14% jump in equipment operations sales to $10.6 billion. However, the bottom line kept shrinking, with net income for the quarter decreasing 14% to $1.07 billion, and EPS landing at $3.93. This tells you that costs-especially production costs and the impact of tariffs-are really eating into the gains you see on the revenue line.

Segment performance in Q4 2025 was quite varied, which is key for our matrix work. Construction & Forestry was the clear standout, with sales surging 27% to $3.38 billion. Production & Precision Agriculture sales grew 10% to $4.74 billion, but its operating profit actually declined due to those cost pressures. Small Agriculture & Turf saw sales rise 7% to $2.46 billion, but its operating profit was nearly wiped out, plummeting to just $25 million from $234 million the prior year.

Looking ahead to fiscal 2026, management is bracing for more difficulty, forecasting net income between $4.00 billion and $4.75 billion, which is a step down from 2025. The big issue is the North American large agriculture market, which they expect to decline 15% to 20% due to high interest rates and weak farmer sentiment. Consequently, they project Production & Precision Agriculture sales to actually fall by 5% to 10%. On the positive side, they see both Small Agriculture & Turf and Construction & Forestry growing sales by about 10%, and management is cautiously optimistic that 2026 will be the bottom of that large ag cycle. Oh, and don't forget the tariffs; they are bracing for about $1.2 billion in direct pretax tariff expenses in 2026, up from $600 million in 2025.

Deere & Company (DE) - BCG Matrix: Stars

You're looking at the areas of Deere & Company (DE) that are leading their markets and showing significant forward momentum, even when other parts of the business face headwinds. These are the Stars-the segments where high market share meets high market growth, demanding continued investment to maintain that leadership position.

For Deere & Company, the Construction & Forestry and Small Ag & Turf segments, alongside the rapidly advancing Precision Technology Stack, fit this high-potential profile based on late 2025 data and early 2026 outlooks. Stars consume cash to fuel their growth, but their strong market position suggests they'll eventually transition into Cash Cows when market growth naturally slows.

Here's a look at the key numbers supporting the Star categorization for these areas:

The Construction & Forestry unit showed significant strength in the fourth quarter of fiscal 2025, with net sales increasing by 27% year-over-year to reach $3.382 billion. Its operating profit for the quarter was $348 million, yielding a 10.3% operating margin. Management projects this segment will maintain momentum with net sales expected to rise by about 10% in fiscal 2026. That's a clear indicator of a market leader in a segment still showing robust demand, supported by infrastructure spending.

The Small Ag & Turf division also demonstrates Star characteristics through its projected growth trajectory. Fourth quarter 2025 net sales were $2.457 billion, a 7% increase from the prior year. For fiscal 2026, net sales are projected to be up around 10%, with an anticipated operating margin between 12.5% and 14%. This growth is expected despite the full fiscal year 2025 net sales for this unit being $10.2 billion, which was down 6.8% year-over-year.

The Precision Technology Stack represents the high-growth, high-market-share future Deere is heavily funding. This isn't just about new machines; it's about capturing recurring revenue from software and autonomy.

• The overall Autonomous Tractors Market was valued at USD 2.20 billion in 2025.
• This market is forecast to grow at a compound annual growth rate (CAGR) of 18.60% to reach USD 5.20 billion by 2030.
• Deere launched its Next Generation Perception System autonomy retrofit kits in January 2025 for model year 2022 and newer 9R and 9RX tractors.
• These kits feature redesigned camera arrays and rugged NVIDIA processing units.
• The company is leveraging this technology across nearly all production systems, including the expansion of the John Deere operations center into road building, earthmoving, golf, and turf.

The focus on Autonomy Retrofit Kits is a direct play on a high-growth aftermarket stream. By offering the second-generation perception system as a retrofit, Deere lowers the barrier to entry for existing machine owners, helping to scale adoption quickly. This strategy is designed to capture market share in a technology space where Deere is clearly a major player alongside AGCO and Kubota Corporation. If onboarding takes 14+ days, churn risk rises, so the ease of implementing these kits is defintely key to their success.

Deere & Company (DE) - BCG Matrix: Cash Cows

You're looking at the bedrock of Deere & Company's financial stability, the units that generate more cash than they need to maintain their position. These are the market leaders in mature, lower-growth areas, and they fund the rest of the company's ambitions. Honestly, these are the businesses you want to own for consistent returns.

Production & Precision Ag (Core Equipment) is the largest segment, and despite the near-term cycle trough, it still represents massive cash generation capability. For the full fiscal year 2025, the Equipment Operations achieved an operating margin of 12.6%. Looking at the fourth quarter of fiscal 2025 specifically, this segment posted net sales of $4.74 billion, with an operating profit of $604 million, translating to a 12.7% operating margin. Management is guiding for the 2026 operating margin to stabilize between 11% and 13%, reflecting expected stability in international markets even as North American large ag faces headwinds. This segment is projected to see sales decline by 5% to 10% in fiscal 2026, which is the low-growth aspect of this Cash Cow.

The strength of this segment is rooted in its market dominance, particularly in large equipment. Deere & Company has sustained a strong market leadership of 44.4% among top agricultural equipment companies over the last 10 years, and holds a leading market share of 19.4% in the overall agricultural equipment market.

The components of this segment that fit the classic Cash Cow profile are:

• Large-Scale Traditional Tractors/Combines: This unit dominates core North American and South American large farming regions.
• The North American large agriculture industry is projected to decline by 15% to 20% in fiscal 2026, signaling market maturity.
• Sales for tractors and crop-cutting combines in South America are projected to be flat in fiscal 2026.

Financial Services is the quintessential supporting Cash Cow, providing high-margin, stable revenue that smooths out equipment cycle volatility. For the full fiscal year 2025, this division delivered a net income of $890 million, representing a 27.9% year-over-year increase. The fourth quarter of 2025 was particularly strong, with net income reaching $293 million, up 69% from the prior year's fourth quarter. This performance was driven by favorable financing spreads and a lower provision for credit losses. The unit is expected to generate approximately $830 million in net income for fiscal 2026, showing a slight expected contraction but still providing substantial, reliable cash flow.

The cash generation from these stable businesses is critical for the entire enterprise. Here is a snapshot of the cash flow and profitability context for the full fiscal year 2025:

The Global Dealer Network, while not a direct revenue segment in the same way, acts as a high-margin cash engine. Its extensive, established nature means lower relative investment is needed to support market share compared to building new capacity. This network generates recurring revenue streams from parts and service, which typically carry higher margins than new equipment sales and are less susceptible to the large ag cycle trough affecting the Production & Precision Ag segment.

• The company is focused on managing inventory and cost control to support cash flow.
• The network supports the entire product lifecycle, ensuring continued service revenue.
• This infrastructure supports the company's ability to maintain market leadership.

Deere & Company (DE) - BCG Matrix: Dogs

Dogs are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

Older, Non-Connected Equipment Models are positioned in markets experiencing significant contraction, reflecting lower relative market share compared to the digitally integrated offerings. For the full fiscal year 2025, Deere & Company's worldwide net sales and revenues decreased by 12% to $45.68 billion, down from $51.7 billion in fiscal year 2024. Net income attributable to Deere & Company for fiscal year 2025 was $5.027 billion, a significant drop from $7.100 billion in fiscal 2024. The North American Large Ag equipment market, which houses many of these legacy models, is projected to see sales decline by roughly 30% in fiscal year 2025.

Select Low-Volume Turf Products fall under the Small Agriculture & Turf segment, which is seeing volume pressure and severe profit erosion. In the first quarter of fiscal 2025, net sales for Small Ag & Turf decreased 28% to $1,748 million, compared to $2,425 million in the first quarter of 2024. While the segment's overall sales decline for the full year 2025 was projected around 10%, the fourth quarter operating profit for Small Ag & Turf plummeted to $25 million from $234 million in the fourth quarter of 2024. This indicates that the lower-volume or older turf models are consuming disproportionate resources relative to their return.

Certain Manufacturing Capacity dedicated to legacy components faces headwinds from reduced demand and increased input costs, making expensive turn-around plans less viable. The company announced 238 layoffs at its Harvester Works facility in August 2025, citing weak tractor demand. Furthermore, tariff costs impacted the business, increasing to nearly $600 million for fiscal 2025. This cost pressure, combined with lower shipment volumes, directly impacts the profitability of production lines not fully aligned with the Smart Industrial strategy.

Here's a look at the financial performance of the segments most indicative of Dog status in fiscal year 2025:

The operational reality points to minimized returns and resource strain in these areas:

• Inventory as of end of July: $7.71 billion
• Inventory increase: Nearly 9% versus prior fiscal year end
• Layoffs announced: 238 at Harvester Works facility in August 2025
• Construction & Forestry sales decline projection: 10-15%
• Projected FY 2026 Net Income: Range of $4.00 billion to $4.75 billion

Deere & Company (DE) - BCG Matrix: Question Marks

You're looking at business units that are burning cash while chasing future growth, which is the classic profile for a Question Mark. These are areas where Deere & Company is betting big on new markets or technologies, but current market share is low, meaning the returns haven't materialized yet.

Small Ag & Turf Profitability

The Small Ag & Turf segment clearly illustrates the high-risk, high-cash-burn nature of a Question Mark as of the fourth quarter of fiscal year 2025. Despite net sales increasing 7% year-over-year to $2.46 billion in Q4 2025, the operating profit collapsed. Operating profit plummeted to just $25 million from $234 million in Q4 2024. This massive decline, an 89% drop, was driven by significant negative impacts, including warranty costs of -$85 million, currency effects of -$65 million, and special items totaling -$63 million. This segment is consuming cash flow due to these costs while trying to grow its top line.

The required investment strategy here is immediate stabilization. The forecast for fiscal year 2026 projects net sales to be up around 10%, with operating margins expected to recover to a range of 12.5% to 14%, up from 11.8% in fiscal 2025. This signals a high-stakes effort to quickly improve margins and prevent this unit from becoming a Dog.

Startup Collaborator Technologies

Deere & Company's investments in external innovation, such as the 2025 Startup Collaborator cohort announced on January 23, 2025, represent classic Question Mark positioning. These are high-potential, unproven technologies requiring upfront commitment. The cohort includes companies like LIDWAVE, focusing on 4D LiDAR-on-a-chip, and Presien, focused on physical AI for worksite safety. While the strategic value is clear-advancing the smart industrial journey-the financial return on these specific collaborations is entirely dependent on successful market adoption and scaling, which is highly uncertain right now. The overall company net income for fiscal year 2025 was $5.027 billion, a 29% decrease from $7.100 billion in fiscal 2024, showing the pressure on cash resources to fund these growth bets.

Electrification Prototypes

New ventures like battery-electric tractor prototypes, such as the E-Power model, fall squarely into this quadrant. These require significant capital expenditure for research, development, and initial low-volume production runs. They operate in a high-growth market-electrification-but currently hold a negligible market share. The investment is a necessary gamble to secure future relevance, consuming cash now with the hope of turning into a Star if the market rapidly adopts the technology. The company's full-year operating margin for equipment operations in 2025 was 12.6%, which must fund both current operations and these large, speculative investments.

Emerging Market Expansion

Aggressive pushes into less-established geographies are inherently Question Marks. These markets promise long-term growth but require heavy upfront investment in distribution, service networks, and localized marketing before achieving meaningful market share. The company's overall strategy acknowledges this, with management noting that growth opportunities are expected in small agriculture & turf and construction & forestry as the large ag cycle bottoms out in 2026. This implies that resources are being strategically diverted to these higher-potential, albeit currently lower-share, areas.

Here's a snapshot of the financial context surrounding these high-growth, low-share bets as of the end of fiscal 2025:

The core decision for Deere & Company regarding these Question Marks is where to place the next dollar of investment capital. You need to decide which of these high-growth areas-electrification, AI partnerships, or emerging markets-has the clearest path to quickly gain market share and transition into a Star, and which should be divested before the cash burn makes them Dogs.