Deere Reports First Quarter Results

Deere reported net sales of its worldwide equipment operations increased 2% for the first quarter (ending Jan. 31). Sales included price increases of 2% and an unfavorable currency-translation effect of 2%. Equipment net sales in the United States and Canada rose 3% for the quarter. Outside the U.S. and Canada, net sales increased 2%, including an unfavorable currency-translation effect of 3%.

Deere’s equipment operations reported operating profit of $891 million for the quarter, compared with $837 million for 1Q13. Results benefited from price realization, partially offset by a less favorable product mix and the unfavorable effects of foreign-currency exchange.

Agriculture and turf sales increased 2% for the quarter, due largely to price realization and higher shipment volumes, partially offset by the unfavorable effects of currency translation. Operating profit was $797 million, compared with $766 million for the same quarter last year. The improvement was due primarily to price realization, partially offset by a less favorable product mix and the unfavorable effects of foreign-currency exchange.

Deere’s worldwide sales of agriculture and turf equipment are forecast to decrease by about 6% for fiscal 2014. Although farm incomes are expected to remain at healthy levels in 2014, they are forecast to be lower than in 2013. In Deere’s view, the decline will dampen demand, especially for larger models of equipment. Partly due to these factors, industry sales for agricultural machinery in the U.S. and Canada are forecast to be down 5% to 10% for the year, with the decline mainly reflecting lower sales of high-horsepower tractors and combines.

Full-year industry sales in the EU28 are forecast to be down about 5% due to lower crop prices and farm incomes. In South America, industry sales of tractors and combines are projected to be down 5% to 10% from strong 2013 levels. Industry sales in the Commonwealth of Independent States are expected to be down slightly for the year, while Asian sales are projected to be up slightly.

In the U.S. and Canada, industry sales of turf and utility equipment are expected to be up about 5% for 2014 as a result of improved market conditions.