Deere’s net sales in agriculture and turf increased for the fourth quarter and the year while operating profit fell.
Net sales in ag and turf increased by 3 percent for the fourth quarter and 2 percent for the year. Operating profit for the quarter and year dipped by 7 percent and 11 percent, respectively.
Deere attributed the fall in operating profit to higher production costs, a rise in expenses related to selling, administration and general business, unfavorable currency exchange, and an increase in expenses related to research and development.
Overall company numbers for the fiscal year were in the positive, with Deere reporting a 5 percent increase in net sales and revenues and a 37 percent increase in net income compared to 2018.
The tractor maker forecasts a 5 to 10 percent decline in global sales of agriculture and turf equipment for fiscal 2020, driven by lower demand for large equipment in North America. Construction and forestry equipment sales are anticipated to slide 10 to 15 percent.
Deere CEO John May said the earnings report reflects “continued uncertainties in the agricultural sector” and “lingering trade tensions coupled with a year of difficult growing and harvesting conditions.”
“At the same time,” May said, “general economic conditions have remained favorable. This has supported demand for smaller equipment and led to solid results for Deere’s construction and forestry business, which had a record year for sales and operating profit.”
Sources: Quad-City Times, Bloomberg