Deere & Company reported Q2/16 earnings were $495.4 million, down 28% compared to $690.5 million for the same period last year. For the first six months of the year, earnings were $749.8 million compared with $1.077 billion last year. Deere said the global farm recession, weak construction-equipment markets lead to lower sales and earnings.

Deere said financial services reported net income of $102.6 million for the quarter and $232.0 million for six months compared with $169.8 million and $326.6 million last year. Lower results for both periods were primarily due to higher losses on lease residual values, less-favorable financing spreads and a higher provision for credit losses. Results for the first six months were also affected by the unfavorable effects of foreign-currency exchange translation. Prior-year results benefited from a gain on the sale of the crop insurance business.

In its outlook, the company said fiscal-year 2016 net income attributable to Deere & Company for the financial services operations is expected to be approximately $480 million. The outlook reflects less-favorable financing spreads, higher losses on lease residual values and an increased provision for credit losses. Additionally, 2015 results benefited from a gain on the sale of the crop insurance business.

“John Deere’s second-quarter performance reflected the continuing impact of the downturn in the global farm economy and further weakness in the construction equipment sector,” said Samuel R. Allen, chairman and CEO. “In the face of challenging market conditions, Deere’s businesses benefited from the sound execution of operating plans, the strength of a broad product portfolio and our success creating a more flexible cost structure.”