Equipment Type

Deere Reports First-Quarter Sales Up 23%

Deere's forecast for the year expects 80% worldwide sales gain due to Wirtgen Group acquisition

February 19, 2018
Deere forecasts 80% worldwide sales gain due to Wirtgen Group acquisition

Deere & Company reported worldwide net sales and revenues for the first quarter, an increase of 23 percent, to $6.913 billion, compared with $5.625 billion for the same period last year. Net sales of the equipment operations were $5.974 billion for the quarter compared with $4.698 billion a year ago.

The company reported a net loss of $535.1 million for the first quarter ended January 28, 2018, compared with net income of $199.0 million for the quarter ended January 29, 2017. Affecting first-quarter 2018 results were charges to the provision for income taxes due to the enactment of U.S. tax reform legislation on December 22, 2017 (tax reform).

Construction & Forestry Division Performance and Outlook:

  •  Construction and forestry sales increased 57 percent for the quarter, with Wirtgen adding 23 percent. Additionally, net sales increased due to higher shipment volumes and the favorable effects of currency translation.

The division reported operating profit of $32 million for the quarter compared with $37 million for the period in 2017. Lower results were attributable to an operating loss for Wirtgen of $92 million related to the effects of purchase accounting and acquisition costs. Excluding Wirtgen, the improvement for the quarter was primarily driven by higher shipment volumes, partially offset by higher production costs. Results last year also included voluntary employee-separation costs.

Deere's worldwide sales of construction and forestry equipment are anticipated to be up about 80 percent for 2018, including a positive currency-translation effect of about 2 percent. Wirtgen is expected to add about 56 percent to the division's sales for the year. The outlook reflects continued improvement in demand driven by higher housing starts in the U.S., increased activity in the oil and gas sector, and economic growth worldwide. In forestry, global industry sales are expected to be up about 5 percent mainly as a result of improved demand throughout the world, led by North America.

"Deere has continued to experience strong increases in demand for its products as conditions in key markets show further improvement," said Samuel R. Allen, chairman and chief executive officer. "Sales gains for the quarter, however, were moderated by bottlenecks in the supply chain and logistical delays"

Net sales of the worldwide equipment operations increased 27 percent for the quarter. Deere's completion of the acquisition of the Wirtgen Group (Wirtgen) in December 2017 added 5 percent to net sales for the quarter. Sales also included a favorable currency-translation effect of 3 percent. Equipment net sales in the United States and Canada increased 24 percent, with Wirtgen adding 1 percent. Outside the U.S. and Canada, net sales increased 33 percent, with Wirtgen adding 12 percent, and a favorable currency-translation effect of 5 percent.

Deere's equipment operations reported operating profit of $419 million for the quarter, compared with $255 million for the period in 2017. Results for the quarter included an operating loss for Wirtgen of $92 million, attributable to the unfavorable effects of purchase accounting and acquisition costs. Excluding the Wirtgen loss, the improvement was primarily driven by higher shipment volumes and lower warranty costs, partially offset by higher production costs. In addition, the prior period included a gain on the sale of SiteOne Landscapes Supply, Inc. (SiteOne), and incurred expenses associated with a voluntary employee-separation program.

The company's equipment operations reported a net loss of $964 million for the first quarter, compared with net income of $85 million for the same period last year. In addition to the operating factors mentioned above, the quarter was unfavorably affected by a provisional income tax expense and adjustments of $1.243 billion related to tax reform.

Financial services reported net income attributable to Deere & Company of $425.3 million for the quarter compared with $114.4 million for the same period last year. The increase was largely attributable to a provisional income tax benefit of $278.1 million related to tax reform. Additionally, quarterly results benefited from a higher average portfolio and lower losses on lease residual values. Last year's results included expenses associated with a voluntary employee-separation program.

For additional information, click here:

More like this

Comments on: "Deere Reports First-Quarter Sales Up 23% "

Subscribe Today

Enter your email address here to be automatically subscribed to our daily newsletter!

Overlay Init