John Deere (DE), a farm and construction equipment manufacturer, offered what could be an early warning sign of Germany’s recovery from the pandemic. In its latest (Q2 2021) 10-Q, John Deere reported more of its lessees are returning equipment than the company had originally expected:

“In the second quarter of 2020, the Company recorded impairment losses on operating leases of $22 million due to higher expected equipment return rates....”

With more lessee’s not interested in purchasing or extending leases prior to maturity, equipment returned to John Dere is remarketed. The company also disclosed that some of the returned construction equipment is worth less than originally estimated:

“In the second quarter of 2020, the Company recorded impairment losses on matured operating lease inventory of $10 million due to lower estimated values of used construction equipment.”

The impairments are related to a German asphalt plant factory and suggest the housing market and oil & gas sectors in the U.S.— which Deere’s construction equipment is most levered to— are still robust. Despite the trouble in Europe, Deere raised full year guidance for both its construction equipment and compact construction equipment segments and now sees 25-30% sales growth for 2021.