Deere & Company reported Q3/14 net income was $850.7 million, down from $996.5 million for the same period of 2013. For the first nine months, net income of $2.513 billion compared with $2.730 billion last year.
The company said a slowdown in the farm economy contributed to lower profits for agricultural equipment.

Worldwide net sales and revenues decreased 5%, to $9.5 billion, for the third quarter and were down 4%, to $27.1 billion, for nine months.

“Deere’s third-quarter performance reflected moderating conditions in the global farm sector, which have negatively affected demand for farm machinery and contributed to lower sales and profits for our agricultural-equipment business,” said Samuel R. Allen, chairman and chief executive officer. “At the same time, our construction and forestry and financial services divisions had higher profit, showing the benefit of a broad-based business lineup. Overall, it was a quarter of solid performance, with income exceeded only by last year’s record for the corresponding period.”

In its outlook, Deere said its worldwide sales of agriculture and turf equipment are forecast to decrease by about 10% for fiscal-year 2014, including a negative currency translation effect of about 1%.

Deere’s worldwide sales of construction and forestry equipment are forecast to increase by about 10% 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.

Net income attributable to John Deere Capital was $129.2 million for the third quarter and $390.0 million year to date, compared with $124.7 million and $335.6 million for the respective periods last year. Deere said results improved for both periods primarily due to growth in the credit portfolio, partially offset by a higher provision for credit losses, and higher selling, administrative and general expenses. In addition, nine-month results benefited from a more favorable effective tax rate. Net receivables and leases financed by JDCC were $33.534 billion at July 31, 2014, compared with $30.096 billion last year.

In its outlook for its financial services business, Deere said fiscal-year 2014 net income for the financial services operations is expected to be approximately $600 million. The outlook reflects improvement over last year due primarily to expected growth in the credit portfolio and a more favorable tax rate. These factors are projected to be partially offset by higher selling, administrative and general expenses, an increase in the provision for credit losses from the low level in 2013, and lower crop insurance margins.

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