Deere & Company (Deere) reported net income of $1.208 billion for Q2/18 compared with net income of $808.5 million for the quarter ended April 30, 2017. For the first six months of the year, net income attributable to Deere was $673.2 million compared with $1.007 billion for the same period last year.

Affecting results for the second quarter and first six months of 2018 were provisional adjustments to the provision for income taxes due to the enactment of U.S. tax reform legislation. Second-quarter results included a favorable net adjustment to provisional income taxes of $174 million, while the first six months reflected an unfavorable net provisional income tax expense of $803 million.

Without these adjustments, net income attributable to Deere for the second quarter and first six months of the year would have been $1.034 billion and $1.476 billion, respectively.

Worldwide net sales and revenues increased 29%, to $10.7 billion, for Q2/18 and rose 27%, to $17.6 billion, for six months. Net sales of equipment operations were $9.7 billion for Q2/18 and $15.721 billion for the first six months, compared with $7.260 billion and $11.958 billion for the periods last year.

Financial services reported net income attributable to Deere of $104.1 million for Q2/18 and $529.4 million for the first six months compared with $103.5 million and $217.9 million last year. Results for both periods benefited from a higher average portfolio, lower losses on lease residual values and a lower provision for credit losses, partially offset by a less-favorable financing spread. Additionally, provisional income tax adjustments related to tax reform had an unfavorable effect of $33.2 million for the quarter and a favorable effect of $228.8 million for six months.

“John Deere reported another quarter of strong performance helped by a broad-based improvement in market conditions throughout the world and a favorable customer response to our lineup of innovative products,” said Samuel R. Allen, chairman and CEO. “Farm machinery sales in both North and South America are making solid gains and construction equipment sales are continuing to move sharply higher. During the quarter, Deere made significant progress working with its suppliers to ramp up production and ensure that products reach customers in a timely manner. At the same time, we are experiencing higher raw-material and freight costs, which are being addressed through a continued focus on structural cost reduction and future pricing actions.”

Net sales of worldwide equipment operations increased 34% for the quarter and 31% for the first six months compared with the same periods a year ago. Deere’s acquisition of the Wirtgen Group (Wirtgen) in December 2017 added 12% to net sales for the quarter and 9% year to date. Sales included a favorable currency-translation effect of 3% for both periods.

Equipment net sales in the U.S. and Canada increased 27% for the quarter and 26% year to date, with Wirtgen adding 5% and 3% for the respective periods. Outside the U.S. and Canada, net sales rose 45% for the quarter and 40% for the first six months, with Wirtgen adding 23% and 19% for the periods. Net sales included a favorable currency-translation effect of 7% for the quarter and 6% for six months.

Deere’s equipment operations reported operating profit of $1.315 billion for Q2/18 and $1.734 billion for the first six months, compared with $1.120 billion and $1.375 billion, respectively, last year. Wirtgen, whose results are included in these amounts, had operating profit of $41 million for the quarter and an operating loss of $51 million year to date. The Wirtgen year-to-date operating loss was attributable to the unfavorable effects of purchase accounting and acquisition costs.

The company’s equipment sales are projected to increase by about 30% for fiscal 2018 and by about 35% for the third quarter compared with the same periods of 2017. Of these amounts, Wirtgen is expected to add about 12% percent to Deere sales for the full year and about 18% for the third quarter. Also included in the forecast is a positive foreign-currency translation effect of about 1% for the year and third quarter.

Net sales and revenues are expected to increase by about 26% for fiscal 2018 with net income attributable to Deere’s forecast to be about $2.3 billion. The company’s net income forecast includes $803 million of provisional income tax expense associated with tax reform, representing discrete items for the re-measurement of the company’s net deferred tax assets to the new U.S. corporate tax rate and a one-time deemed earnings repatriation tax. Adjusted net income attributable to Deere & Company excluding the provisional income tax adjustments associated with tax reform is forecast to be about $3.1 billion.