Deere & Company reported Q3/16 net income was $488.8 million compared with $511.6 million for the same period last year. For the first nine months, net income was $1.239 billion compared with $1.589 billion last year. Deere said weakness in global markets for farm and construction equipment leads to decline in sales and net income

Deere said worldwide net sales and revenues decreased 11%, to $6.724 billion, for the third quarter and declined 9%, to $20.124 billion, for nine months. Net sales of the equipment operations were $5.861 billion for the quarter and $17.737 billion for the first nine months, compared with $6.840 billion and $19.843 billion for the periods last year.

Deere said Financial Services net income of $125.9 million for the quarter and $357.9 million for nine months was down 18% and 25%, respectively from $153.4 million and $480.0 million last year.

Lower results for the quarter were primarily due to less-favorable financing spreads, a higher provision for credit losses and higher losses on lease residual values. The year-to-date decline was largely a result of higher losses on lease residual values, less-favorable financing spreads and a higher provision for credit losses. Additionally, prior year-to-date results benefited from a gain on the sale of the crop insurance business.

“John Deere’s performance in the third quarter reflected the continuing impact of the global farm recession as well as difficult conditions in construction equipment markets,” said Samuel R. Allen, chairman and chief executive officer. “All of Deere’s businesses remained profitable with the Agriculture & Turf division reporting higher operating profit than last year. As in past quarters, our results benefited from the sound execution of our operating plans, the impact of a broad product portfolio, and our success keeping a tight rein on costs and assets.”

The following highlights on market conditions & outlook were excerpted from the news release:

• Industry sales for agricultural equipment in the U.S. and Canada are forecast to be down 15% to 20% for 2016. The decline, reflecting the impact of low commodity prices and weak farm incomes, has been most pronounced in the sale of higher-horsepower models.
• Industry sales of turf and utility equipment in the U.S. and Canada are expected to be flat to up 5% for 2016. Deere sales are benefiting from new products and general economic growth.
• Worldwide sales of construction and forestry equipment are forecast to be down about 18% for 2016, including a negative currency-translation effect of about 1%. The forecast decline in sales largely reflects the impact of weak conditions in North America.
• In forestry, global industry sales are expected to be down 5% to 10% from last year’s strong levels.
• Fiscal-year 2016 net income attributable to Deere & Company for the financial services operations is expected to be approximately $480 million. The outlook reflects less-favorable financing spreads, higher losses on lease residual values and an increased provision for credit losses. Additionally, 2015 results benefited from a gain on the sale of the crop insurance business.

Net income attributable to John Deere Capital was $90.4 million for the third quarter and $259.9 million year to date, down 29% and 31%, respectively from $126.9 million and $376.4 million for the same periods last year. The decline for the quarter was primarily due to a less favorable financing spread, higher losses on lease residual values and a higher provision for credit losses. Year-to-date results decreased mainly due to higher losses on lease residual values, less-favorable financing spreads and a higher provision for credit losses.

Net receivables and leases financed by JDCC were $32.928 billion at July 31, 2016, compared with $33.400 billion last year.