Net sales from equipment operations at Deere & Co. rose about 6 percent for the first quarter ended Jan. 30. The company last week raised its annual profit forecast after posting estimate-beating quarterly earnings.
Deere has raised equipment prices to combat rising shipping and supply chain costs, but that has not deterred demand, with the company’s North American order books full or nearly full for most of its large farm equipment in 2022, Reuters reported.
Third Bridge senior analyst Patrick Donnelly said he remained bullish on Deere’s ability to continue to roll out higher-priced precision agriculture technology in response to demand in spite of supply-related production problems.
Deere forecasts 2022 net income between $6.7 billion and $7.1 billion, up from a prior estimate of $6.5 to $7 billion.
Specifically, the company said it expects sales of large ag equipment to be up about 20 percent. In 2021, Deere said demand outpaced the industry’s ability to supply, driven by strong fundamentals, advanced fleet age and low field inventory. With all of these dynamics still present, Deere expects demand to exceed the industry’s ability to produce for a second consecutive year.
Order books for the upcoming year are mostly full, Deere said, except for a few cases where it has paused orders to reevaluate inflationary pressures later in the year.
In the small ag and turf category, Deere expects industry sales in the U.S. and Canada to remain largely flat for the year, because supply challenges continue to limit the industry’s ability to produce.
Sources: Deere, Reuters