Good morning, and thank you for joining. John Deere's third quarter performance reflects the company's focus on disciplined execution amidst challenging market dynamics. Despite headwinds from tariffs, Deere's equipment operations delivered a 12.6% operating margin in the quarter. Global uncertainty and difficult fundamentals continue to weigh on customer sentiment in many of Deere's key end markets. However, over the course of the quarter, we also saw better-than-anticipated demand in several segments, reflecting pockets of optimism across the business. After a slow start to the year, turf and compact utility tractor shipments in North America were better than expected, reflected improvement in consumer confidence and favorable weather conditions. Year-over-year retail sales also increased for both tractors in Europe and earthmoving and forestry equipment in North America, reversing several quarters of flat or declining sales. Amidst this backdrop, Deere's performance continues to demonstrate strong financial results. Production costs, inclusive of tariffs remain favorable in our Ag and turf businesses as a result of disciplined management, efficiency gains in our factories and favorable material costs. The actions that we have taken over the past 18 months to manage inventories across the board have resulted in significant year-over- year declines across all business units and geographies, positioning the company well to respond to inflections in market demand. And the additional incentives we have deployed are providing support to customer buying decisions in the current interest rate environment, notably in North American earthmoving and the used equipment and the used agricultural equipment market. Clearly, higher levels of global uncertainty persists. However, our order books remain solid. Select markets are showing early signs of positive inflection. And importantly, we remain well positioned from both an inventory and structural cost perspective to respond when demand growth returns. We now begin with Slide 3 and our results for the third quarter.
Net sales and revenues were down 9% to $12.018 billion, and net sales for the equipment operations were also down 9% to $10.357 billion. Net income attributable to Deere & Company was $1.289 billion or $4.75 per diluted share. Diving into our individual business segments, we'll start with Production and Precision Ag on Slide 4. Net sales of $4.273 billion were down 16% compared to the third quarter last year, primarily due to lower shipment volumes and unfavorable price realization. Price realization was negative by just under 1 point.
This is a result of incremental pool funds we accrued during the quarter to support our dealers' efforts to aggressively address used inventory levels in North America. Currency translation was slightly positive.
Operating profit was $580 million with a 13.6% operating margin for the segment. The year-over-year decrease was primarily due to lower shipment volumes and an unfavorable sales mix. Next, we'll turn to Small Ag and Turf on Slide 5.
Net sales were down 1% year-over-year, totaling $3.025 billion in the third quarter due to slightly lower shipment volumes, partially offset by currency translation and price realization. Price realization was positive by about 0.5 point. Currency translation was also positive by roughly 1.5 points. Operating profit declined slightly year-over-year to $485 million, leading to a 16% operating margin.
The decrease was primarily due to tariffs, partially offset by lower warranty expenses and lower production costs. Slide 6 gives our 2025 industry outlook for ag and turf markets globally. In the U.S. and Canada, we continue to expect large ag equipment industry sales to be down approximately 30% in the fiscal year. Demand continues to be pressured by high interest rates, elevated used inventory levels in late model year machines and trade uncertainty, which is partially mitigated by tight global stocks for grains and oilseeds, stable farm balance sheet supported by strong farmland values and the distribution of government funds. For small ag and turf in the U.S. and Canada, industry demand is now projected to be down 10%. Dairy and livestock fundamentals remain strong, while capital investments in the segment remains muted due to high cost of expansion.
Soft consumer confidence and elevated interest rates continue to weigh on purchase decisions in turf and compact utility tractors. However, we saw improved sentiment and better-than-anticipated retail sales during the quarter, which supported our upward revision to the full year outlook. Shifting to Europe. Sentiment is trending favorably, driven by strong dairy fundamentals, stabilizing interest rates and an improving arable outlook. We now expect the industry to be flat to down 5% in fiscal year 2025. In South America, we continue to project industry sales of tractors and combines to remain flat in 2025. Positive sentiment in Brazil is supported by record crop production, improved corn and soy profitability levels and continued expansion of production acreage in the region. However, high interest rates, which continued to increase over the quarter and questions related to trade policy with the U.S. are causing some caution in the market. Industry sales for Asia are now expected to be flat to up 5%, driven by an improved outlook for the Indian tractor market. Moving on to our segment forecast beginning on Slide 7.
For Production and Precision Ag, our net sales forecast for the full year remains down between 15% and 20%. The forecast assumes roughly 1 point of positive price realization, offset by 1 point of negative currency translation. For the segment's operating margin, our full year forecast remains between 15.5% and 17%. Slide 8 covers our forecast for the small ag and turf segment. With projected improvements in Europe, India and North American turf and compact utility tractors, we now expect net sales to be down about 10% this year.
This guide includes 0.5 point of positive price realization as well as 0.5 point of positive currency translation. The segment's operating margin is now forecasted to be between 12% and 13.5%, in line with the improved sales outlook. Shifting now to Construction and Forestry on Slide 9. Net sales for the quarter were down 5% year-over-year to $3.059 billion, mainly due to unfavorable price realization.
Price realization was negative by just under 5 points. Negative price in the quarter was driven by incremental incentive programs deployed in the North American earthmoving market, where competitive pricing pressure persists. Currency translation was positive by roughly 1.5 points. Operating profit of $237 million was down year-over-year, resulting in a 7.7% operating margin, primarily due to unfavorable price realization and tariffs. These changes have been partially offset by a favorable product mix.
Slide 10 provides an update to our 2025 Construction and Forestry industry outlook. Industry sales for earthmoving equipment in the U.S. and Canada are still expected to be down approximately 10%, while compact construction equipment in the U.S. and Canada is now expected to be flat to down approximately 5%. Construction markets remain stable with employment at all-time highs and construction backlogs at above-average levels. U.S. government infrastructure spending remains elevated and continues to provide support to the industry. On the other hand, single-family housing starts, along with investment in multifamily and commercial real estate markets are slowing due to higher interest rates and broader economic pressure. Additionally, equipment replacement in the rental industry remains muted. All of these factors continue to drive caution in the market relative to capital investment. However, order activity over the course of the past quarter has trended more favorably. Global forestry markets are expected to remain flat to down 5%. The projection for the global road building market remains roughly flat. North America is slightly lower year-over-year. However, growth in Europe and a slight recovery in China are contributing to keep industry levels roughly unchanged from 2024. Moving on to the Construction and Forestry segment outlook on Slide 11. 2025 net sales estimates remain down between 10% and 15%. Net sales guidance for the year now includes flat currency translation and about 2 points of negative price realization, driven by the competitive pricing environment in earthmoving in North America. The segment's operating margin is now projected to be between 8.5% and 10%, reflecting higher levels of tariff costs and lower price realization.
Transitioning to our Financial Services operations on Slide 12. Worldwide Financial Services net income attributable to Deere & Company in the third quarter was $205 million.
Net income was higher due to lower provision for credit losses and prior year special items. For fiscal year '25, our outlook increased to $770 million. Revised estimates for SA&G spending and provision for credit losses in 2025 drove the improvement from last quarter's forecast. Next, Slide 13 outlines our guidance for Deere & Company net income, our effective tax rate and operating cash flow. For fiscal year '25, we tightened our outlook for net income from last quarter to now be between $4.75 billion and $5.25 billion. Our forecast for net income is largely unchanged quarter-over-quarter. Recall, the top end of our guide from last quarter reflected a scenario where tariff rates moderated. Next, our guidance reflects an effective tax rate between 19% and 21%.
And lastly, cash flow expectations from the equipment operations remain in the range of $4.5 billion to $5.5 billion. This concludes our formal comments. We'll now shift the discussion to address a few topics specific to the quarter. Starting off with Deere's performance in the third quarter. Net sales declined approximately 9% year-over-year, and we saw operating margin come in at 12.6%. Josh Beal, can you provide some additional color on what happened this quarter?