Deere Reports Lower Quarterly Profits

John Deere last week reported its third quarter earnings. Company officials said net income of $851 million was the second highest for any third quarter in its history.

Net sales and revenues were $9.5 billion, down 5%. Total worldwide equipment operations net sales were $8.7 billion, down 6%.

Agriculture & turf sales declined by 11%, primarily due to lower shipment volume. Operating profit was $941 million.

The company expects 2014 value of ag production to increase about 5% over 2013 levels and ag fundamentals to remain strong for grain.

Deere reported that falling commodity prices put pressure on demand for farm equipment, especially larger models. However, strength in the livestock sector provides support to sales of mid- and smaller-size tractors. As a result, the company now expects industry sales in the U.S. and Canada to drop about 10% this year.

Deere chairman and chief executive Sam Allen said that the company will scale back production, and last week it announced it will cut 600 workers from four Midwest plants, with most of the losses coming from operations in the Quad Cities and Des Moines, IA, metro areas. The company also warned that plants in Ankeny and East Moline, IL, part of the Quad Cities, would experience shutdowns lasting about a month each. S