Deere Sales Down 4% in Q1 2020

Feb. 24, 2020

John Deere & Co. sales decreased 4 percent in the first quarter of 2020 to $7.6 billion, down from $8.0 billion in the first quarter of 2019. Equipment sales, including construction, dropped 6 percent to $6.5 billion from $6.9 billion in Q1 2019.

CEO John May said sales “reflected early signs of stabilization” in the farm sector due to lesser trade tensions and higher exports.

“At the same time,” he said in a prepared statement, “activity in the construction sector has slowed leading to lower sales and profit for our Construction & Forestry division. Also impacting results in Deere’s construction equipment business were our actions to reduce factory production and lower inventories in response to current market conditions. Additionally, the quarter included costs of a voluntary employee-separation program, which is among the steps Deere is taking to improve flexibility and efficiency.”

Sales of construction and forestry equipment were off 10 percent in the quarter, from $2.3 billion in 2019 to 2.0 billion in 2020. Operating profit for the group declined 59 percent, to $93 million.

Profits for John Deere & Co. increased in the quarter. It reported net income of $517 million for Q1 2020, compared with $498 million in 2019. The company projected net income for fiscal 2020 to be in a range of $2.7 billion to $3.1 billion.

“Looking ahead, we are particularly encouraged by the broad use of precision technologies and believe the company is well-positioned to strengthen its leadership in this vital area,” May said. “In addition, we are proceeding with a series of measures to create a more focused organizational structure that can operate with greater speed and agility. These steps are leading to improved efficiencies and helping the company focus its resources and investments on areas that have the most impact on performance.”

The company also projected that sales of construction and forestry equipment would be down 10 to 15 percent for 2020, with foreign-currency rates having an unfavorable translation effect of about 1 percent. The outlook reflects slowing construction activity as well as efforts to bring down field inventory levels. Industry construction-equipment sales in North America are expected to decline by 5 to 10 percent for the year. In forestry, global industry sales are expected to be down 5 to 10 percent due to weaker demand in North America and Russia.

Source: John Deere & Co.