Deere Reports Record 1Q Earnings

Net income attributable to Deere & Company was $649.7 million, for the first quarter ended January 31, compared with $532.9 million, for the same period last year.

Worldwide net sales and revenues for the first quarter increased 10%, to $7.421 billion, compared with $6.767 billion last year. Net sales of the equipment operations were $6.793 billion for the quarter compared with $6.119 billion a year ago.

Net income of the company’s equipment operations was $525 million for the quarter, compared with $416 million last year. Company equipment sales are projected to be up about 6% for fiscal 2013 and up about 4% for the second quarter compared with the same periods of 2012. For the full year, net income attributable to Deere is anticipated to be approximately $3.3 billion.

Agriculture & Turf sales increased 16% for the quarter largely due to higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation. Operating profit was $766 million compared with $574 million for the quarter last year. The improvement was primarily due to higher shipment volumes and price realization. These factors were partially offset by increases in selling, administrative and general expenses, warranty costs, production costs and research and development expenses.

Construction and forestry sales decreased 7%. Operating profit for the quarter was $71 million compared with $124 million a year ago. The reduced operating profit was primarily due to lower shipment volumes. In addition, higher production costs, an unfavorable product mix, as well as increases in research and development and selling, administrative and general expenses were offset by price realization.

Worldwide sales of agriculture and turf equipment are forecast to increase by about 6% for full-year 2013. Relatively high commodity prices and strong farm incomes are expected to continue supporting a favorable level of demand for farm machinery during the year.

Industry sales for agricultural machinery in the U.S. and Canada are forecast to be flat to up 5% in relation to last year’s healthy levels. Caution in the U.S. livestock sector is expected to partly offset continued strength in demand for large equipment such as high-horsepower tractors and combines.

Full-year industry sales in the EU27 are forecast to be down about 5% due to weakness in the overall economy and last year’s poor harvest in the U.K. In South America, industry sales are projected to be up 10% to 15% as a result of strong market conditions in Brazil.

Industry sales in the Commonwealth of Independent States are expected to be down slightly from 2012, while Asian sales are projected to be slightly higher due to some strengthening in the Chinese economy.

In the U.S. and Canada, industry sales of turf and utility equipment are expected to be about flat for 2013, reflecting a continuation of cautious consumer sentiment. Deere’s sales are expected to increase more than the industry due to the impact of new products.