Net income attributable to Deere & Co. increased 18 percent to $649.7 million, or $1.65 per share, for the first quarter ended Jan. 31, compared with $532.9 million, or $1.30 per share, for the same period last year.
While agriculture and turf segment sales increased 16 percent for the quarter largely due to higher shipment volumes and price realization, construction and forestry sales decreased 7 percent, primarily because of lower shipment volumes.
Operating profit in the agriculture and turf segment was $766 million compared with $574 million for the quarter last year. First-quarter construction and forestry operating profit was $71 million compared with $124 million a year ago.
Overall worldwide net sales and revenues for the first quarter increased 10 percent, to $7.4 billion, compared with $6.8 billion last year. Net sales of the equipment operations were $6.8 billion for the quarter compared with $6.1 billion a year ago.
"With our eleventh consecutive quarter of record earnings, John Deere has started 2013 on a positive note and is setting the stage for another successful year," said Samuel Allen, chairman and CEO. "These results are further proof of the adept execution of operating and marketing plans aimed at expanding our global market presence while maintaining a tight grip on costs and assets. As a result, Deere remains well-positioned to earn solid profits in today's fragile global economy and, longer term, to benefit from major trends that we continue to believe hold great promise for the company and its customers and investors."
Net sales of the worldwide equipment operations rose 11 percent for the quarter. Sales included price increases of 3 percent and an unfavorable currency-translation effect of 1 percent. Equipment net sales in the United States and Canada increased 18 percent for the quarter. Outside the U.S. and Canada, net sales increased 2 percent for the quarter, including an unfavorable currency-translation effect of 3 percent.
Deere's equipment operations reported operating profit of $837 million for the quarter, compared with $698 million last year. Results benefited from higher shipment volumes and price realization. These factors were partially offset by increases in production costs, selling, administrative and general expenses, warranty costs, and research and development expenses. The increased production costs related primarily to manufacturing-overhead expenses in support of growth, new products, and engine-emission requirements.
Net income of the company's equipment operations was $525 million for the quarter, compared with $416 million last year. The same operating factors mentioned above, along with a lower effective tax rate and increased interest expense, affected the quarterly results.
Financial services reported net income attributable to Deere & Co. of $132.9 million for the quarter compared with $119.1 million last year. The improvement was primarily related to growth in the credit portfolio and higher crop insurance margins, partially offset by increased selling, administrative and general expenses. In addition, last year's results benefited from revenue related to wind energy credits.
Company equipment sales are projected to be up about 6 percent for fiscal 2013 and up about 4 percent for the second quarter compared with the same periods of 2012. For the full year, net income attributable to Deere & Co. is anticipated to be approximately $3.3 billion.
"We're confident our investment in new products and additional capacity will help Deere fully capitalize on the world's growing need for food, shelter and infrastructure in the years ahead," Allen said. "However, the near-term outlook is being tempered by uncertainties over fiscal, economic and trade issues that are undermining business confidence and restraining growth."
Worldwide sales of agriculture and turf equipment are forecast to increase by about 6 percent for full-year 2013. Deere's worldwide sales of construction and forestry equipment are forecast to increase by about 3 percent for 2013. The increase reflects a cautious outlook for U.S. economic growth, higher international sales of construction equipment, and flat sales in world forestry markets.
Deere & Co. is headquartered in Moline, Ill.
