Deere Q1 Earnings Down on ‘Soft Conditions’ in Farm & C/E Sectors

Deere & Company reported Q1/17 net income was $193.8 million compared with $254.4 million for the period ended January 31, 2016. Deere said results were pressured by soft conditions in farm and construction equipment sectors.

Worldwide net sales and revenues for the first quarter increased 2%, to $5.625 billion, compared with $5.525 billion last year. Net sales of the equipment operations were $4.698 billion for the quarter compared with $4.769 billion a year ago.

The following highlights were excerpted from the news release:

  • Deere said its financial services subsidiary, John Deere Capital (JDCC) net income was $74.2 million for the first quarter compared with $99.9 million last year. The decline for the quarter was primarily due to less-favorable financing spreads and expenses related to the previously announced voluntary employee-separation program.
  • Net receivables and leases financed by JDCC were $30.643 billion at January 29, 2017, compared with $31.510 billion at January 31, 2016.
  • Company equipment sales are projected to increase about 4% for fiscal 2017 and be up about 1 percent for the second quarter compared with the same periods of 2016. Foreign-currency rates are not expected to have a material translation effect on equipment sales for the year or second quarter. Net sales and revenues are projected to increase about 4% for fiscal 2017 with net income attributable to Deere & Company of about $1.5 billion.
  • Deere’s worldwide sales of agriculture and turf equipment are forecast to increase by about 3% for fiscal-year 2017, with currency translation not expected to have a material impact. Industry sales for agricultural equipment in the U.S. and Canada are forecast to be down 5 to 10% for 2017. The decline, reflecting weakness in the livestock sector as well as the continuing impact of low crop prices, is expected to affect both large and small equipment.
  • Deere’s worldwide sales of construction and forestry equipment are forecast to be up about 7% for 2017, with no material currency-translation impact. The forecast reflects moderate economic growth worldwide. In forestry, global industry sales are expected to be flat to down 5%, with soft conditions in North America offsetting strength in other regions.

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