Deere Reports 2Q Earnings

Deere & Company reported net income was $1.056 billion, for the second quarter ended April 30, compared with $904.3 million, for the same period last year.

For the first six months of the year, net income attributable to Deere as $1.589 billion, compared with $1.418 billion last year. Worldwide net sales and revenues increased 12%, to $10.009 billion, for the second quarter and rose 12% to $16.775 billion for six months. Net sales of the equipment operations were $9.405 billion for the quarter and $15.524 billion for six months, compared with $8.328 billion and $13.841 billion for the same periods last year.

“John Deere is well on its way to a year of outstanding performance after reporting an eighth consecutive quarter of record earnings,” said Samuel R. Allen, chairman and chief executive officer. “Our results are a reflection of positive conditions in the global farm economy, which is continuing to show impressive strength and endurance. Deere is gaining new customers throughout the world, who are responding with great enthusiasm to our innovative lines of equipment.”

Net sales of the worldwide equipment operations increased 13% for the quarter and 12% for six months compared with the same periods a year ago. Sales included price realization of 5% for the quarter and 4% year to date and an unfavorable currency-translation effect of 2% for the quarter and 1% for six months. Equipment net sales in the U.S. and Canada increased 18% for the quarter and 13% year to date. Outside the U.S. and Canada, net sales increased 6% for the quarter and 12% for six months, with unfavorable currency-translation effects of 4% and 3% for these periods.

Deere’s equipment operations reported operating profit of $1.522 billion for the quarter and $2.220 billion for six months, compared with $1.268 billion and $1.914 billion last year.

Financial services reported net income attributable to the company of $109.2 million for the quarter and $228.3 million for six months compared with $105.1 million and $223.3 million last year. Results were higher for the quarter primarily due to growth in the credit portfolio, partially offset by increased selling, administrative and general expenses.

Company equipment sales are projected to increase by about 15% for fiscal 2012 and by about 25% for the third quarter compared with the same periods a year ago. Included is an unfavorable currency-translation impact of about 3% for the year and 4% for the third quarter. For the full year, net income attributable to Deere is anticipated to be about $3.350 billion.

Agriculture & Turf sales increased 11% for the quarter and 10% for six months largely due to higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation.

Operating profit was $1.403 billion for the quarter and $1.977 billion year to date, compared with $1.163 billion and $1.720 billion, respectively, last year. The improvement in both periods was primarily driven by the impact of higher shipment volumes and price realization. These factors were partially offset by increased production costs related to new products and engine-emission requirements, as well as higher raw-material costs and research and development expenses.

Deere’s worldwide sales of agriculture and turf equipment are forecast to increase by about 15% for full-year 2012, including a negative currency-translation impact of about 3%.

Industry farm-machinery sales in the U.S. and Canada are forecast to rise by more than 10% in 2012. Overall conditions remain positive and demand continues to be strong, especially for high-horsepower equipment.

Full-year industry sales in the EU 27 nations of Western and Central Europe are forecast to be flat to up 5% as favorable conditions in the grain, livestock and dairy sectors outweigh general economic concerns. Sales in the Commonwealth of Independent States are expected to be considerably higher in 2012. Sales in Asia, while slowing, are forecast to be up moderately. In South America, industry sales are projected to be down 5% to 10% from last year’s attractive levels due to uncertainty in Argentina and drought conditions in parts of the region.

Net receivables and leases financed by JDCC were $24.558 billion at April 30, 2012, compared with $22.482 billion last year.