Deere & Company

Digital transformation and innovation · Technology obsolescence and evolution

Failure to develop and introduce new technologies or lack of adoption of such technologies by our customers could impact our ability to successfully execute our Smart Industrial Operating Model.

Digital transformation and innovation · Artificial intelligence and automation

If we are unable to deliver precision technology and agricultural solutions to our customers, it could affect our business, results of operations, and financial condition. Data sourcing, technology, integration and process issues, program bias into decision-making algorithms, security problems, and the protection of privacy could impair the adoption and acceptance of autonomous machine solutions.

Digital transformation and innovation · Digital transformation and modernization

John Deere may not realize the anticipated benefits of its Smart Industrial operating model and Leap Ambitions...Several factors could impact John Deere's ability to successfully execute the Smart Industrial operating model, including, among other things, failure to accurately assess market opportunity and the technology required to address such opportunity; failure to develop and introduce new technologies or lack of adoption of such technologies by John Deere's customers.

Natural and catastrophic events · Climate change and environmental impact

Governmental actions designed to address climate change based on the emergence of new technologies and business models in connection with the transition to a lower-carbon economy could adversely affect John Deere and our customers. The regulation of GHG emissions from certain stationary or mobile sources or the imposition of carbon pricing mechanisms could result in additional costs to us in the form of taxes or emission allowances.

Economic and market conditions · Economic recession and downturns

The demand for our products and services depends on the fundamentals in the markets in which we operate and can be significantly reduced in an economic environment characterized by high unemployment, high interest rates, cautious consumer spending, inflation, lower corporate earnings, and lower business investment.

Geopolitical and trade · Trade policies tariffs and sanctions

Trade restrictions, negotiation of new trade agreements, non-tariff trade barriers, local content requirements, and imposition of new or retaliatory tariffs against certain countries or covering certain products, including developments in U.S.-China trade relations, export control and sanctions against Russia, have limited, and could continue to limit, our ability to capitalize on current and future growth opportunities in international markets.

Geopolitical and trade · International conflicts and tensions

In fiscal year 2023, as a result of the war in Ukraine, we suspended shipments of machines and service parts to Russia. The suspension of shipments to Russia reduced actual and forecasted revenue for the region and resulted in impairments of most long-lived assets, among other impacts.

Natural and catastrophic events · Natural disasters and extreme weather

Unfavorable weather conditions or natural catastrophes that reduce agricultural production and demand for agriculture and turf equipment could directly and indirectly affect our business. Such conditions include insufficient levels of rain, excessive rain or flooding, temperatures outside normal ranges, and natural disasters such as regional floods, hurricanes or other storms, droughts, diseases, wildfires, and pests.

Market position and competition · Pricing pressure and margin compression

Our ability to match new product offerings to global customers' preferences for different types and sizes of equipment and various equipment features and functionality, at affordable prices, is critical to our success. Failure to deliver quality products that meet customer needs at competitive prices could have an adverse effect on our business.

Strategic execution · Merger acquisition and divestiture risks

We may encounter difficulties in integrating acquisitions with our operations, applying internal control processes to these acquisitions, managing strategic investments, assimilating new capabilities to meet the future needs of our businesses, and/or combining business cultures.

Market position and competition · Competitive pressure and market share loss

We compete in a variety of highly competitive global and regional markets with other manufacturers and distributors that produce and sell similar products. In addition, our industry is attracting non-traditional competitors, including technology-focused companies and start-up ventures.

Human capital and workforce · Labor relations and union negotiations

Disputes with labor unions may adversely affect our ability to operate in our facilities as well as impact our financial results. For example, the UAW initiated a labor strike that had an adverse effect on our results of operations in fiscal 2022 because of reduced productions and shipments.

Human capital and workforce · Talent acquisition and retention

Our continued success depends, in part, on our ability to identify and attract qualified candidates with the requisite education, background, and experience as well as our ability to develop, engage, and retain qualified employees. Failure to attract, develop, engage, and retain qualified employees could impair our ability to execute our business strategy.

Supply chain and procurement · Raw material availability and cost volatility

Changes in the availability and price of certain raw materials, components, and whole goods have resulted and could continue to result in disruptions to the supply chain causing production disruptions, increased costs, and lower profits on sales of our products. In fiscal year 2022, supply chain disruptions impacted many aspects of our business, including receiving past due deliveries from suppliers, parts availability, increased production costs, and higher inventory levels.

Market and investment · Interest rate and yield curve risk

Central bank policy interest rates continued to increase in fiscal year 2023. Most of our retail receivables are fixed rate, while wholesale financing receivables are variable rate. We have both fixed and variable rate borrowings. Historically, rising interest rates impact our borrowings sooner than the benefit is realized from the financing receivable and equipment on operating lease portfolios.

Market and investment · Investment portfolio performance

We may sustain increases in funding obligations under our pension plans which may impair our liquidity or financial condition. Significant adverse changes in credit or market conditions could result in actual rates of return on pension investments being lower than expected.

International and currency · Foreign exchange and currency exposure

We are a global company with transactions denominated in a variety of currencies. We are subject to currency exchange risk to the extent that our costs are denominated in currencies other than those in which we earn our revenues.

International and currency · International operations and emerging markets

Our global operations are subject to complex and changing laws and regulations, the violation of which could expose us to potential liabilities, increased costs, and other adverse effects. We are subject to numerous international, federal, state, and local laws and regulations, many of which are complex, frequently changing, and subject to varying interpretations.

Market and investment · Interest rate and yield curve risk

Due to the cessation of the London Interbank Offered Rate ('LIBOR'), the Company has entered into financial transactions such as credit agreements, receivables, derivatives, and notes that use the Secured Overnight Financing Rate ('SOFR') or the Sterling Overnight Index Average ('SONIA') as interest rate benchmarks. SOFR and SONIA are calculated differently from LIBOR and have inherent differences, which could give rise to uncertainties, including the limited historical data and volatility in the benchmark rates.

Data and privacy · Data protection and privacy laws

We are subject to governmental laws, regulations, and other legal obligations related to privacy and data protection. The legislative and regulatory framework for privacy and data protection issues worldwide is rapidly evolving. The EU General Data Protection Regulation (GDPR), the California Consumer Privacy Act, and the China Personal Information Protection Law, among others, impose stringent data protection requirements.