Joshua Rohleder
Manager of Investor Communications at Deere & Company
Good morning and thank you for joining. John Deere completed the third quarter with disciplined performance amid a tough macro backdrop. Financial results for the quarter included an 18.5% margin for the equipment operations. Ag fundamentals remain muted and market demand in Construction and Forestry has tempered, alongside continued price competition, resulting in another quarter of overall challenging market conditions. Despite tougher markets in both Ag and Construction, we continued to execute to our plan, focusing on proactive inventory and cost management. Notably for the quarter, we adjusted rest-of-year production schedules in our earthmoving product lines to target lower year-end -- year-end field inventory levels. As a result, order books across all segments are effectively full for the remainder of the fiscal year as we position our business to respond to changes in retail demand.
These actions, along with a continued focus on cost control, are essential to keeping our business healthy, as we continue to invest in future growth. We now begin with Slide 3 and our results for the third quarter. Net sales and revenues were down 17% to $13.152 billion, while net sales for the equipment operations were down 20% to $11.387 billion. Net income attributable to Deere & Company was $1.734 billion, or $6.29 per diluted share. Double clicking into our individual business segments, we'll start with Production and Precision Ag on Slide 4. Net sales of $5.099 billion were down 25% compared to the third quarter last year, primarily due to lower shipment volumes which were partially offset by price realization. Price realization was positive by slightly more than 2.5 points. Currency translation was negative by a little more than 1 point.
Operating profit was $1.162 billion, with a 22.8% operating margin for the segment. The year-over-year decrease was primarily due to lower shipment volumes and employee separation program expenses. These were partially offset by price realization and lower warranty expenses. Next, we'll turn to Small Ag and Turf on Slide 5. Net sales were down 18% year-over-year, totaling $3.053 billion in the third quarter because of lower shipment volumes partially offset by price realization. Price realization was positive by more than 1.5 points. Currency translation was negative by just under half a point. Operating profit declined year-over-year to $496 million, leading to a 16.2% operating margin. The decrease was primarily due to lower shipment volume and higher warranty expenses, which were partially offset by price realization.
Slide 6 gives our 2024 industry outlook for Ag and Turf markets globally. Across all major markets, we continue to see muted demand resulting from a challenging macro environment. Global stocks of grains continue to rebuild with excellent growing conditions leading to better-than-expected production and lower commodity prices. High interest rates and geopolitical uncertainty further weigh on customers purchase decisions, resulting in reduced demand across all end markets. In the U.S. and Canada, we continue to expect Large Ag Equipment industry sales to be down approximately 15% during the quarter. Demand continues to be pressured by declining farm margins and elevated used inventory levels in late model year machines, which is partially offset by an elevated fleet age, rising farmland values, and stable farm balance sheets.
Within Small Ag and Turf in the U.S. and Canada, industry demand estimates remain down approximately 10%. Further declines in the Turf and Compact Utility Tractor segments, which are more sensitive to interest rates, are partially offset by improving dairy and livestock fundamentals. Turning to Europe, the industry is forecasted to be down approximately 15%, reflecting yield headwinds and weakened margins. Volatile weather patterns continue to drive commodity price and arable cash flow uncertainty, which is enhanced by slightly elevated input costs. However, dairy and livestock fundamentals remain healthy, providing moderate stability to the segment. In South America, we expect industry sales of tractors and combines to decline between 15% and 20%. Commodity price softening and elevated interest rates continue to pressure grower profitability, especially in Brazil, our largest market in the region.
Fundamentals are further pressured by better-than-expected production in Brazil, despite regional weather challenges and a slower-than-forecasted recovery in Argentina. Industry sales in Asia -- in Asia, are forecasted down moderately. Moving on to our segment forecast beginning on Slide 7. Production and Precision Ag, our net sales' forecast remains down between 20% and 25% for the full year. The forecast now assumes roughly 2 points of positive price realization and flat currency translation for the full year. For the segment's operating margin, our full-year forecast remains between 20.5% and 21.5% despite muted demand. Slide 8 covers our forecast for the Small Ag and Turf segment. We expect net sales to remain down between 20% and 25%. The guide now includes 2 points of positive price realization and flat currency translation. The segment's operating margin continues to be forecasted between 13.5% and 14.5%, in line with slowing net sales.
Shifting now to Construction and Forestry on Slide 9, net sales for the quarter were down 13% year-over-year to $3.235 billion due to lower shipment volumes. Price realization was negative by 1 point. Currency translation was also negative by more than half a point. Operating profit of $448 million was down year-over-year, resulting in a 13.8% operating margin, due primarily to lower shipment volumes, unfavorable sales mix, and negative price realization. Slide 10 provides an update to our 2024 Construction and Forestry industry outlook. Industry sales for earthmoving equipment in the U.S. and Canada is now expected to be down 5% to 10%, while compact construction equipment in the U.S. and Canada is now expected to be flat to down 5%. Demand for earthmoving and compact construction equipment is down from robust levels in 2023 and increasingly competitive, as rental re-fleeting decelerates and used inventory levels rise.
While U.S. government infrastructure spending remains supportive and manufacturing investments continue to increase, we are witnessing a sequential slowdown in single-family housing starts amid interest rate uncertainty. This is compounded by continued declines in multi-family housing starts and persistent weakness in the commercial real estate sector. Global forestry markets are projected to remain down around 10%, as all global markets continue to be challenged. The global world building market forecast remains flat to down 5%, as strong infrastructure spending in the U.S. is offset by continued softness in Western Europe. Moving on to Construction and Forestry segment outlook on Slide 11. 2024 net sales estimates are now expected to be down between 10% and 15%, as moderating demand is coupled with planned underproduction.
Net sales guidance for the year now includes about half a point of positive price realization and flat currency translation. The segment's operating margin is now projected to be around 15%, reflecting a tougher competitive environment, decelerating demand, and underproduction of construction equipment. Transitioning to our Financial Service operations on Slide 12, worldwide Financial Services' net income attributable to Deere & Company in the third quarter was $153 million. Net income was lower due to a higher provision for credit losses and less favorable financing spreads, which were partially offset by a higher average portfolio and favorable discrete tax items. For fiscal year 2024, our outlook for net income is now at $720 million, as benefits from a higher average portfolio balance are expected to be more than offset by a higher provision for credit losses and less favorable financing spreads.
Subsequent to the quarter, we announced an agreement with Banco Bradesco to invest and become 50% owners in our Brazilian financing subsidiary, Banco John Deere. This strategic decision reduces incremental financing risks while allowing for continued investment and growth in the Brazilian market. The transaction is expected to close in the second fiscal quarter of 2025. In our quarterly results, we classified Banco John Deere as a business held for sale, which resulted in the net impact of a pre-tax and after-tax loss of $15 million, accounted for in SA&G within the Financial Services segment. Next, Slide 13 outlines our guidance for Deere & Company's net income, our effective tax rate, and operating cash flow. For fiscal year '24, we remain -- we maintain our outlook for net income at approximately $7 billion. Next, our guidance continues to incorporate an effective tax rate between 23% and 25%. And lastly, cash flow from the equipment operations is now projected to be in the range of $6 billion to $6.5 billion.
And finally, on Slide 14, I'd like to hand it over to John May to say a few words.