Good morning, and thank you for joining us today. John Deere completed the first quarter with a 5.9% operating margin for the equipment operations. Our results reflect the strength and resilience of a diversified portfolio spanning multiple end markets and geographies. All business segments delivered higher net sales year-over-year with both small ag and turf and Construction & Forestry top line growing by over 20%. Our results for the quarter exceeded our forecast, driven by shipping volumes that were ahead of our initial plan. Importantly, over the course of the quarter, we saw continued strengthening of our order books across several product lines, most notably in small ag and turf as well as construction. In earthmoving, double-digit year-over-year growth in retail settlements and the growing order bank have prompted us to increase our industry outlooks for both construction and compact construction equipment in North America. In small ag, order activity for midsized tractors supporting the dairy and livestock production system has remained solid. while order velocity for North American turf equipment and compact utility tractors has increased. Global large ag fundamentals, while still challenged, were largely stable over the quarter. This stability has enabled a modest improvement in our net sales forecast for North American large ag this year as our combined early order program finished better than expected and large tractor order activity has increased. These improvements have helped us to offset softer projections for the South American ag equipment market in 2026. The developments over the course of the past 3 months have strengthened our belief that 2026 marks the bottom of the current cycle as we project mid-single-digit net sales growth for the equipment operations this fiscal year. Slide 3 starts with the results for the first quarter. Net sales and revenues were up 13% to $9.611 billion, while net sales for the equipment operations were up 18% to $8.001 billion. Net income attributable to Deere & Company was $656 million or $2.42 per diluted share.
Turning to our individual segments. We begin with the Production & Precision Ag business on Slide 4.
Net sales of $3.163 billion were up 3% compared to the first quarter last year, primarily due to positive effects of foreign currency translation. Price realization was roughly flat. Price realization in North America was positive, though was offset by additional incentives for the South American market. Currency translation was positive by nearly 4 points.
Operating profit was $139 million, resulting in a 4.4% operating margin for the segment. The year-over-year decrease was primarily due to higher tariffs, unfavorable sales mix and higher warranty expenses. Moving on to Small Ag & Turf on Slide 5.
Net sales were up 24%, totaling $2.168 billion in the first quarter because of higher shipment volumes and positive effects of foreign currency translation. Price realization was positive by 2 points. Currency translation was also positive by just under 2.5 points. Operating profit increased year-over-year to $196 million, resulting in a 9% operating margin. The increase was primarily due to higher shipment volumes, favorable sales mix and price realization, partially offset by higher tariffs.
Slide 6 gives our industry outlook for ag and turf markets globally. We continue to expect the large ag equipment industry in the U.S. and Canada to decline 15% to 20% this year. However, we are seeing encouraging developments that should provide stability to this segment in the near term while also improving the setup for return to growth. While global row crop production remains strong — global production remains strong, robust demand for commodities and a normalization of trade flows are providing support for prices at current levels, which are above the lows that growers experienced last summer. Additionally, government programs are supporting farmer liquidity in the short term. Ongoing improvement in the used inventory market is providing a better environment for machine replacement, while the age of the fleet continues to grow. Additionally, proposed government policy actions, including additional support for biofuels, provide potential tailwinds for growth. For small ag and turf in the U.S. and Canada, industry demand estimates remain flat to up 5%. The dairy and livestock sector remains profitable due to strong beef prices, while the turf market is seeing a modest return to growth as that sector normalizes after several years of declines.
Moving to Europe. The industry is still projected to be flat to up 5%. The underlying fundamentals of the ag sector are largely unchanged with no near-term material impact expected from newly negotiated EU trade agreements or recent declines in milk prices. Interest rates are steady, long-term financing costs are manageable and the region continues to show resilience across key arable markets. In South America, industry sales of tractors and combines are now expected to be down approximately 5%, driven by the Brazilian market where subdued commodity prices, high interest rates and the stronger real are putting pressure on producer margins. Industry sales in Asia are now projected to be flat to down 5%. The Indian market is now expected to only be down slightly from the strong levels seen in 2025. Next, our segment forecast begin on Slide 7.
For Production & Precision Ag, net sales are still forecasted to be down between 5% and 10% for the full year. The forecast assumes roughly 1.5 points of positive price realization and about 3 points of positive currency translation. For the segment's operating margin, our full year forecast remains between 11% and 13%. Slide 8 shows our forecast for the Small Ag & Turf segment. We now expect net sales to be up about 15%.
This includes 2 points of positive price realization as well as 2 points of positive currency translation. The segment's operating margin guide is now between 13.5% and 15%. Shifting now to Construction & Forestry on Slide 9. Net sales for the quarter increased roughly 34% year-over-year to $2.67 billion due to higher shipment volumes and positive effects of foreign currency translation. Price realization was negative by just under 0.5 point. Currency translation was positive by 3.5 points. Operating profit of $137 million more than doubled year-over-year, resulting in a 5.1% operating margin due primarily to favorable shipment volumes as well as production efficiencies, partially offset by higher tariffs.
Slide 10 describes our Construction & Forestry industry outlook. Industry sales for both construction equipment and compact construction equipment in the U.S. and Canada are now expected to be up around 5% year-over-year. Construction markets remain solid, supported by U.S. government infrastructure spending, declining interest rates, strong rental demand and data center construction starts. Our year-to-date retail settlement activity is running ahead of our expectations, and our order books continue to grow. Global forestry markets are still expected to remain flat. Global road building markets are now expected to be up around 5%, driven by market increases in both North America and Europe.
Moving to the C&F segment outlook on Slide 11. 2026 net sales are now forecasted to be up around 15%. Our net sales guidance for the year includes about 2.5 points of positive price realization and just over 2 points of positive currency translation. Our projection for the segment's operating margin also increased and is now estimated to be between 9% and 11%. Now transitioning to our Financial Services operations on Slide 12. Worldwide Financial Services net income attributable to Deere & Company in the first quarter was $244 million. The year-over-year increase was mainly due to favorable financing spreads and a lower provision for credit losses, partially offset by favorable special items recorded in the first quarter last year. For fiscal year 2026, our outlook increased to $840 million, primarily driven by lower provision for credit losses. Finally, Slide 13 outlines our guidance for net income, effective tax rate and operating cash flow. For fiscal year '26, our updated outlook for net income is now between $4.5 billion and $5 billion. Next, our guidance continues to incorporate an effective tax rate between 25% and 27%. And lastly, projections for cash flow from the equipment operations increased by $500 million at both ends of our range and is now expected to be between $4.5 billion and $5.5 billion.
This concludes our formal comments. We'll now shift to a few topics specific to the quarter. To start, let's review Deere's results this quarter. Net sales increased by about 18% year-over-year and margins were just under 6%. Although the first quarter of fiscal year '25 had an easier top line compare given last year's underproduction in Small Ag & Turf and Construction & Forestry, it still performed ahead of our plan. Josh Beal, could you explain what happened this quarter and how it affected our full year outlook?