MOLINE, Ill. — Deere & Co. reported net income of $170.8 million, or 68 cents per share, for the first quarter ended Jan. 31, compared with net income of $68.0 million, or 28 cents per share, last year.
Worldwide net sales and revenues grew 25 percent to $3.484 billion for the first quarter as compared to $2.794 billion a year ago. Net sales of the equipment operations were $2.912 billion for the quarter as compared with $2.274 billion last year.
“Our first-quarter results reflect improved performance in both our agricultural equipment and construction and forestry divisions. All equipment divisions are benefiting from improving market conditions and continued positive customer response to our products,” said Robert Lane, chairman and chief executive officer.
All equipment divisions experienced higher physical volumes of sales in the quarter and sales benefited from currency translation and improved price realization. Equipment sales in the United States and Canada rose 29 percent. Net sales outside the United States and Canada increased 26 percent for the quarter.
Deere's equipment operations reported operating profit of $198 million for the quarter, compared with $42 million last year. Operating profits exclude the impact of external interest expense, taxes and certain other corporate expenses.
Division sales for commercial and consumer equipment were up 18 percent for the quarter. The increase was primarily due to strong retail demand. Operating profit was $20 million for the quarter, compared with $23 million last year. The lower operating profit was attributed to higher promotional and support costs in advance of the spring selling season and the impact of a weaker U.S. dollar on component purchases, partially offset by higher sales.
Construction and Forestry division sales rose 46 percent for the quarter, primarily because of higher physical volumes, which were reflective of improved retail activity, the company said. Operating profit improved to $93 million for the quarter, compared with $16 million last year. The improvement was attributed to higher sales and production volumes and a $30 million gain from the sale of its ownership share of Sunstate Equipment in November 2003.
As previously announced, the company purchased an additional 42 percent of Nortrax Inc. in December 2003 for $112 million, increasing its ownership to 83 percent. Accordingly, Nortrax was consolidated as a part of the construction and forestry operations beginning in December 2003. As a result of this consolidation, Deere now recognizes all sales and profits of Nortrax as equipment sold retail. This had an unfavorable impact of approximately $15 million on first quarter operating profit.
The company expects an increase between 18 to 20 percent for fiscal 2004 and forecasts net income to be in the range of $900 million to $1 billion. Deere's net equipment sales for the second quarter of 2004 are currently forecast to be up approximately 30 percent. Production levels are expected to increase between 18 and 20 percent for the second quarter. Company-wide net income for the second-quarter 2004 is forecast in a range of $400 to $450 million. Excluding the impact of currency and price, sales are expected to increase 23 to 25 percent for the quarter and 12 to 14 percent for the year.
Standard & Poor's said last month that its ratings on Deere & Co. were unaffected by the company's improved first quarter 2004 results. Underfunded postretirement obligations remain a concern for the rating, S&P said.
