Both construction and agricultural markets are currently soft

Income, Revenues Continue Downward Trend in Deere’s Second Quarter

May 20, 2016

Deere & Company posted net income of $495.4 million in its fiscal second quarter ended April 30, a 28.3-percent decline compared to $690.5 million in the same period last year.

Michael Roth

Deere & Company posted net income of $495.4 million in its fiscal second quarter ended April 30, a 28.3-percent decline compared to $690.5 million in the same period last year. For the first six months of the fiscal year, net income dropped 30.3 percent from $1.077 billion a year ago to $749.8 million this year.

Worldwide net sales and revenue dropped 4 percent to $7.875 billion for the second quarter and decreased 8 percent to $13.4 billion for the six-month period.

Net sales of the equipment operations were $7.107 billion for the quarter and $11.876 billion for the first six months, compared to $7.399 billion and $13.004 billion for the previous year.

“John Deere’s second quarter performance reflected the continuing impact of the downturn in the global farm economy and further weakness in the construction equipment sector,” said Samuel Allen, chairman and CEO. “In the face of challenging market conditions, Deere’s businesses benefited from the sound execution of operating plans, the strength of a broad product portfolio and our success creating a more flexible cost structure.”

Deere’s Construction and Forestry division, sales plunged 16 percent for the second quarter and 20 percent for six months mainly as a result of lower shipment volumes and higher sales-incentive costs.

Deere officials aren’t expecting much improvement in the near future.

The company now expects equipment sales to decrease about 9 percent for fiscal 2016 and to drop about 12 percent in the third quarter compared to fiscal Q315. For fiscal 2016, net income is expected to be about $1.2 billion.

“Although our forecast calls for lower results this year in light of ongoing market pressures, Deere is continuing to perform at a much higher level than in previous downturns,” Allen added. “Deere’s financial condition remains strong and we believe the company is well-positioned to capitalize on attractive growth opportunities that will deliver value to our customers and investors in the future.”