Deere & Co. forecast an annual profit below estimates on Wednesday, pressured by tariff impacts and weaker margins from its large tractors.

CEO John May said ongoing margin pressures from tariffs would continue to weigh on its large farm equipment unit, although he expects to benefit from cost cuts and demand from two of its other units that serve forestry and small agriculture markets.

“We believe 2026 will mark the bottom of the large ag cycle,” May added.

Lower crop prices and rising production costs have prompted farmers to defer big-ticket purchases and opt for rentals or preowned units for large agricultural equipment including tractors and combine harvester.

Deere had also been considering production shifts, higher pricing and widening its portfolio of used equipment as it looked to offset the demand hit.

U.S. President Donald Trump’s sweeping tariffs have impacted companies across sectors, especially manufacturing and industrial firms that rely significantly on imported raw materials. In August, Deere said it expected a pre-tax tariff impact of nearly $600 million in 2025.

Deere expects its annual net income for fiscal 2026 to be between $4.00 billion and $4.75 billion, below analysts’ estimates of $5.33 billion, according to data compiled by LSEG.

The farm-equipment maker posted a quarterly net income of $1.06 billion, or $3.93 per share, for the quarter, down from $1.24 billion, or $4.55 per share, in the year-ago period. 

Analysts on average had expected a quarterly profit of $3.85 per share.

Its fourth-quarter revenue rose 11% to about $12.4 billion from a year ago, topping estimates of $9.85 billion.