Deere & Co. posted worldwide net income of $788 million or $1.98 per share, for the fiscal third quarter ended July 31, compared with $712.3 million, or $1.69 per share, for the same period a year ago, a 10.6-percent increase. For the first nine months of the year, net income was $2.38 billion compared with $2.13 billion a year ago, an 11.8-percent hike.
Worldwide revenues increased 15 percent to $9.59 billion, for the third quarter and rose 13 percent to $26.4 billion for the nine-month period. Net sales of equipment operations were $8.9 billion for the quarter and $24.5 billion for the nine months, compared with $7.7 billion and $21.6 billion for the same periods a year ago, increases of 15.7 percent and 13.4 percent respectively.
“John Deere delivered record third quarter performance in both sales and income,” said Samuel Allen, chairman and CEO. “Although a strong quarter, we are not satisfied that sales fell short of our expectations due to weakening in certain international markets and short-term manufacturing inefficiencies resulting from the introduction of a record number of new products.”
Equipment net sales in the United States and Canada leapt 28 percent for the quarter and 18 percent year to date. Outside the U.S. and Canada, net sales were essentially unchanged for the quarter and increased 7 percent for nine months, with unfavorable currency translation effects of 11 percent and 6 percent for these periods.
Deere’s equipment operations reported operating profit of $1.13 billion for the quarter and $3.35 billion for nine months, compared with $969 million and $2.88 billion last year, with improvement primarily resulting from the impact of price realization and higher shipment volumes, partially offset by higher production costs and raw material costs and increased research and development expenses. The hike in product costs primarily related to new products and-emission requirements.
Financial services reported net income of $110.4 million for the quarter and $338.6 million for nine months, compared with $125.6 million and $348.9 million last year. Results dropped primarily because of increased SG&A expenses, narrower financing spreads and higher reserves for crop insurance claims. These factors were partially offset by growth in the credit portfolio and a lower provision for credit losses.
The company expects equipment sales to increase by about 13 percent for both fiscal 2012 and the fourth quarter compared with the same periods a year ago. Included is an unfavorable currency-translation impact of about 3 percent for the year and about 4 percent for the fourth quarter. For the full year, the company expects net income to be about $3.1 billion.
“Global economic conditions and dryness in several key markets warrant some caution in coming months,” said Allen. “However, this year’s drought could positively influence our outlook as it spotlights the need for John Deere’s highly productive agricultural equipment.”
In construction and forestry, sales jumped 23 percent for the quarter and 24 percent for nine months, with higher shipment volumes and price realization. Operating profit was $113 million for the quarter and $356 million for nine months, compared with $110 million and $304 million a year ago Deere expects worldwide sales of construction and forestry equipment to increase about 17 percent for 2012, with U.S. sales showing strong recovery.