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Deere Announces Record First-Quarter Earnings


Deere & Co. reported net income of $649.7 million, or $1.65 per share, for the first quarter ended Jan. 31, compared with $532.9 million, or $1.30 per share, for the same period last year. Worldwide net sales and revenues for the first quarter increased 10 percent, to $7.421 billion, compared with $6.767 billion last year.

Net sales of the equipment operations were $6.793 billion for the quarter compared with $6.119 billion a year ago.

"With our eleventh consecutive quarter of record earnings, John Deere has started 2013 on a positive note and is setting the stage for another successful year," said Samuel R. Allen, chairman and chief executive officer. "These results are further proof of the adept execution of operating and marketing plans aimed at expanding our global market presence while maintaining a tight grip on costs and assets," he said. "As a result, Deere remains well-positioned to earn solid profits in today's fragile global economy and, longer term, to benefit from major trends that we continue to believe hold great promise for the company and its customers and investors."

Net sales of the worldwide equipment operations rose 11 percent for the quarter. Sales included price increases of 3 percent and an unfavorable currency-translation effect of 1 percent. Equipment net sales in the United States and Canada increased 18 percent for the quarter. Outside the U.S. and Canada, net sales increased 2 percent for the quarter, including an unfavorable currency-translation effect of 3 percent.

Deere's equipment operations reported operating profit of $837 million for the quarter, compared with $698 million last year. Results benefited from higher shipment volumes and price realization. These factors were partially offset by increases in production costs, selling, administrative and general expenses, warranty costs, and research and development expenses. The increased production costs related primarily to manufacturing-overhead expenses in support of growth, new products and engine-emission requirements.

Net income of the company's equipment operations was $525 million for the quarter, compared with $416 million last year. The same operating factors mentioned above, along with a lower effective tax rate and increased interest expense, affected the quarterly results. Company equipment sales are projected to be up about 6 percent for fiscal 2013 and up about 4 percent for the second quarter compared with the same periods of 2012. For the full year, net income attributable to Deere & Co. is anticipated to be approximately $3.3 billion.

Construction and forestry sales decreased 7 percent. Operating profit for the quarter was $71 million compared with $124 million a year ago. The reduced operating profit was primarily due to lower shipment volumes. In addition, higher production costs, an unfavorable product mix, as well as increases in research and development and selling, administrative and general expenses were offset by price realization.

Deere's worldwide sales of construction and forestry equipment are forecast to increase by about 3 percent for 2013. The increase reflects a cautious outlook for U.S. economic growth, higher international sales of construction equipment, and flat sales in world forestry markets. In the forestry sector, further weakness in European markets is expected to offset higher U.S. demand.