Deere Reports 2Q Earnings Of $904 Million

Deere Reports 2Q Earnings Of $904 Million

Net income attributable to Deere & Company, Moline, IL, was $904.3 million for the second quarter ended April 30, compared with $547.5 million for the same period last year. Second-quarter 2010 earnings were $677.0 million, excluding a tax charge of $129.5 million related to the enactment of U.S. health-care legislation.

For the first six months of the year, net income attributable to Deere & Company was $1.418 billion compared with $790.7 million last year. Six-month 2010 results also were affected by the tax charge.

Worldwide net sales and revenues increased 25%, to $8.910 billion, for the second quarter and were up 26% to $15.029 billion for six months. Net sales of the equipment operations were $8.328 billion for the quarter and $13.841 billion for six months, compared with $6.548 billion and $10.785 billion for the corresponding periods last year.

“With our record second-quarter performance, John Deere is well on its way to a year of exceptional results,” said Samuel R. Allen, chairman and chief executive officer. “Our success reflects strong demand for our innovative lines of equipment and the continued skillful execution of our business plans. Deere’s actions to expand its global competitive position are attracting new customers worldwide and making a major contribution to our results.”

“Sales of large farm machinery, particularly in the U.S., Canada and Brazil, are continuing to support the company’s performance. Construction equipment shipments are moving higher in spite of lingering weakness in the residential and commercial construction sectors. Markets for construction equipment in the U.S. and for farm machinery in Europe are in the early stages of recovery,” Allen said. “We’re optimistic about the longer-term opportunity for further improvement in these and other key areas.”

The company also said it plans to invest $80 million in a new agricultural equipment manufacturing plant in northeast China to help meet increased demand in the region. The factory will be located in Harbin in the Heilongjiang Province where the company already runs John Deere Jiamusi Works. The new factory will build mid- and large-sized tractors, sprayers, planters and harvesting equipment. It will be Deere’s seventh manufacturing plant in China although two of the existing plants are joint ventures. The new factory is expected to begin making Deere equipment in late 2012.

Deere has also received a loan for $168 million from the European Bank for Reconstruction and Development to set up a leasing firm in Russia. The loan with a five year term will support renewal of outdated farm equipment and will also target the forestry and construction industries. The new firm will target medium-sized customers whose equipment is in urgent need of renovation, typically mid-sized former collective farms which have turned profitable in the past few years. ◆