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Deere Announces Record Earnings


Deere & Co. sales and income reached new single-quarter records, according to the company. Net income was $1.084 billion, or $2.76 per share, for the second quarter ended April 30, compared with $1.056 billion, or $2.61 per share, for the same period last year.

For the first six months of the year, net income attributable was $1.734 billion, or $4.41 per share, compared with $1.589 billion, or $3.91 per share, last year.

Construction and Forestry sales decreased 6 percent for the quarter and six months mainly due to lower shipment volumes. Operating profit was $81 million for the quarter and $153 million for six months, compared with $119 million and $243 million last year. The decline in operating profit for both periods was due primarily to lower shipment volumes.

Deere's worldwide sales of construction and forestry equipment are forecast to decrease by about 5 percent for 2013. The decline reflects a cautious outlook for U.S. economic growth, cool, wet weather conditions in North America, and flat sales in world forestry markets. In forestry, further weakness in European markets is expected to offset higher U.S. demand.

Worldwide net sales and revenues increased 9 percent to $10.914 billion for the second quarter and rose 9 percent to $18.335 billion for six months. Net sales of the equipment operations were $10.265 billion for the quarter and $17.058 billion for six months, compared with $9.405 billion and $15.524 billion for the periods last year.

“After a record-setting second quarter, John Deere is well on its way to another year of strong performance,” said Samuel R. Allen, chairman and chief executive officer. Second-quarter sales and income were the highest for any quarterly period in company history, he pointed out. “Deere’s results are a reflection of positive conditions in the global farm economy, which continues to show impressive strength. The company’s performance also offers further proof of the adept execution of our operating and marketing plans, which are aimed at expanding our global market presence.”

Net sales of the worldwide equipment operations increased 9 percent for the quarter and 10 percent for six months compared with the same periods a year ago. Sales included price realization of 3 percent for the quarter and year-to-date and an unfavorable currency-translation effect of 2 percent for the quarter and 1 percent for six months. Equipment net sales in the United States and Canada increased 9 percent for the quarter and 13 percent year-to-date. Outside the U.S. and Canada, net sales increased 9 percent for the quarter and 6 percent for six months, with unfavorable currency-translation effects of 4 percent and 3 percent for the periods.

Deere's equipment operations reported operating profit of $1.663 billion for the quarter and $2.500 billion for six months, compared with $1.522 billion and $2.220 billion last year. The improvement for both periods was due primarily to the impact of price realization and higher shipment volumes. These factors were partially offset by increased production costs and higher selling, administrative and general expenses as well as unfavorable effects of foreign-currency exchange. The higher production costs were related primarily to manufacturing overhead expenses in support of growth and new products, engine-emission requirements, and postretirement benefit expenses. These items were partially offset by lower raw-material costs. In addition, higher warranty costs and research and development expenses affected year-to-date results.

Net income of the company's equipment operations was $953 million for the second quarter and $1.478 billion for the first six months, compared with $947 million and $1.362 billion in 2012. The operating factors mentioned above, along with a higher effective tax rate and increased interest expense, affected both quarterly and year-to-date results.

Company equipment sales are projected to increase by about 5 percent for fiscal 2013 and by about 3 percent for the third quarter compared with the same periods a year ago. Included is an unfavorable currency-translation impact of about 1 percent for the year. For the full year, net income attributable to Deere & Co. is anticipated to be about $3.3 billion.