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Deere's Construction and Forestry Sales Up 45 Percent in 2011

Deere & Co. net income was $669.6 million, or $1.62 per share, for the fourth quarter ended Oct. 31, compared with $457.2 million, or $1.07 per share, for the same period last year. Construction and forestry sales rose 34 percent for the quarter and were up 45 percent for the year mainly due to higher shipment volumes. The division had operating profit of $87 million for the quarter and $392 million for the year, compared with $54 million and $119 million last year.

Worldwide net sales and revenues increased 20 percent, to $8.612 billion, for the fourth quarter and were up 23 percent to $32.013 billion for the full year. Net sales of the equipment operations were $7.903 billion for the quarter and $29.466 billion for full-year 2011, compared with $6.564 billion and $23.573 billion for the corresponding periods last year.

“John Deere has completed another year of exceptional achievement,” said Samuel R. Allen, chairman and chief executive officer. “Our success reflects a continued pattern of strong customer response to our innovative lines of equipment coupled with the skillful execution of business plans aimed at expanding our global competitive position.”

During the year, Deere introduced a record number of products and announced plans for six new factories, in China, Brazil and India. “John Deere's record performance is a further tribute to our operating model, which stresses rigorous cost management and asset efficiency,” Allen stated. “As a result, we are achieving unprecedented financial results and generating healthy levels of cash flow. These dollars are funding growth throughout the world and also are being shared directly with investors in the form of dividends and share repurchases.”

Net sales of the worldwide equipment operations increased 20 percent for the quarter and 25 percent for the year. Sales included a favorable currency-translation effect of 2 percent for the quarter and 3 percent for the year and price increases of 3 percent for both periods. Equipment net sales in the United States and Canada rose 14 percent for the quarter and 17 percent for the year. Outside the U.S. and Canada, net sales were up 31 percent and 38 percent for the respective periods, with favorable currency-translation effects of 4 percent and 7 percent.

Deere's equipment operations reported operating profit of $955 million for the quarter and $3.839 billion for the year, compared with $716 million and $2.909 billion last year. Results were better for both periods largely due to higher shipment volumes and improved price realization. These factors were partially offset by increased raw-material costs, higher manufacturing-overhead costs related to new products, and higher research and development expenses. In addition, full-year results were impacted by higher selling, administrative and general expenses.

Net income of the company's equipment operations was $552 million for the quarter and $2.329 billion for the year, compared with $357 million and $1.492 billion last year. The same operating factors mentioned above, along with a lower effective tax rate, affected both the quarterly and annual results.

Financial services reported net income attributable to Deere & Company of $122.1 million for the quarter and $471.0 million for the year compared with $98.4 million and $372.5 million, respectively, last year. Results for both periods benefited from growth in the credit portfolio and a lower provision for credit losses, partially offset by narrower financing spreads and a higher effective tax rate. Included in 2010 fourth-quarter results was a write-down of wind-energy assets held for sale to fair value.

In spite of an unsettled global economy, demand for John Deere products is expected to experience substantial growth in fiscal year 2012 and the company is forecasting further increases in sales and earnings as a result. Company equipment sales are projected to increase about 15 percent for the year and to be up 16 to 18 percent for the first quarter compared with the same periods of 2011. Included is a favorable currency-translation impact of about 3 percent for the quarter and about 1 percent for the year. For the full year, net income attributable to Deere & Company is anticipated to be approximately $3.2 billion.

Supported by a record 2011 performance, John Deere remains well-positioned to carry out its extensive growth plans and capitalize on positive long-term economic trends, according to Allen. “Thanks in large part to the dedication and hard work of our employees, dealers and suppliers worldwide, John Deere's plans for helping meet growing global needs for food and infrastructure are moving ahead at an accelerated rate,” he said. “We are proud of the company's performance in 2011 and look forward to building on these gains in 2012 and beyond. We have great confidence in the company's future and our role in helping feed, clothe and shelter the world's growing population. These developments in our view hold great promise, which should prove rewarding to our investors and other stakeholders in the future.”