Deere Income Falls in 2Q

May 14, 2014

Deere & Company’s net income in the second quarter ended April 30, 2014 was $980.7 million, compared with $1.084 billion in the same period last year. For the first six months of 2014, net income attributable to Deere & Company was $1.662 billion compared with $1.734 billion last year.

Worldwide net sales and revenues decreased 9 percent, to $9.948 billion, for the second quarter and were down 4 percent, to $17.602 billion, for six months. Net sales of the equipment operations were $9.246 billion for the quarter and $16.195 billion for six months, compared with $10.265 billion and $17.058 billion for the same periods last year.

Net sales of the worldwide equipment operations declined 10 percent for the quarter and 5 percent for six months compared with the same periods a year ago.

Deere's equipment operations reported operating profit of $1.361 billion for the quarter and $2.252 billion for six months, compared with $1.663 billion and $2.500 billion last year. The decline for both periods was due primarily to the impact of lower shipment volumes, the unfavorable effects of foreign-currency exchange, and a less favorable product mix, partially offset by price realization.

Construction and forestry sales increased 2 percent for the quarter and 3 percent for six months mainly as a result of higher shipment volumes. Operating profit was $132 million for the quarter and $226 million for six months, compared with $81 million and $153 million last year. Operating profit improved for both periods primarily due to higher shipment volumes, lower production costs and lower selling, administrative and general expenses, partially offset by higher sales incentive costs. Six-month results also benefited from lower research and development expenses.

Deere's worldwide sales of construction and forestry equipment are forecast to increase by about 10 percent for full-year 2014. The gain reflects further economic recovery and higher housing starts in the U.S. as well as sales increases outside the U.S. and Canada. Global forestry sales are expected to be up for the year due to general economic growth and improved sales in European markets.

Company equipment sales are projected to decrease about 4 percent for fiscal 2014 and for the third quarter compared with the year-ago periods. Included is an unfavorable currency-translation effect of about 1 percent for the year. For the fiscal year, net income attributable to Deere & Company is anticipated to be about $3.3 billion.

"John Deere expects to achieve near-record earnings for the full year and the company is well-positioned to deliver solid financial results throughout the business cycle," said Samuel R. Allen, Deere chairman and CEO. "We're confident our extensive investments in new products and markets, coupled with a tight rein on costs and assets, will keep the company on a sound financial footing and help sustain our growth plans."