Deere’s Fiscal Second Quarter Sales Slide on Weak Worldwide Agriculture
Deere & Co.’s net income for its fiscal second quarter ended April 30 was $690.5 million, compared to $980.7 million in the same quarter a year ago, a 29.6-percent drop. For the first six months of the fiscal year, net income was $1.077 billion compared to $1.662 billion a year ago, a 35-percent plunge.
Worldwide net revenues dropped 18 percent to $8.171 billion for the quarter, and 17 percent to $14.554 billion for the first six months of the fiscal year. Net sales for equipment operations were $7.399 billion for the quarter and $13.004 for six months, declines of 20 percent and 19.8 percent, respectively.
“John Deere’s second quarter results were noteworthy in light of the weak conditions that continue to affect the global agriculture sector,” said Samuel Allen, chairman and CEO. “Our performance reflected the adept execution of our operating plans and contributions of a well-rounded business lineup. Deere’s construction and forestry and financial services divisions had higher results over the quarter, and our agriculture and turf operations remained solidly profitable despite lower demand for large models of farm machinery. We also saw benefits from our success developing a more responsive cost and asset structure, a fact that gives our performance a greater degree of resilience.”
Equipment operations posted operating profit of $828 million for the quarter and $1.242 billion for the six-month period, compared with $1.361 billion and $2.252 billion a year ago. Deere attributed the declines to lower shipment volumes, the impact of a less favorable product mix and the unfavorable effects of foreign-currency exchange.
However, construction and forestry sales increased 2 percent for the quarter, and 7 percent for the six months, with higher shipment volumes and price realization. The company expects Deere’s worldwide sales of construction and forestry equipment to increase about 2 percent in 2015, including a negative currency-translation effect of about 3 percent. The sales improvement reflects economic growth and higher housing starts in the United States, offset by weakening conditions in the energy sector and energy-producing regions, as well as lower sales outside of the U.S. and Canada.
