Deere’s Net Income Soars 62 Percent in Fiscal Second Quarter

Deere & Co. posted net income of $802.4 million, or $2.49 per share, for its fiscal second quarter ended April 30, compared with $495.4 million, or $1.56 per share, for the same period in 2016, a 62-percent increase. For the first six months of the fiscal year, net income was $996.2 million, or $3.10 per share, compared with $749.8 million, or $2.36 per share, a 32.9 percent leap.

Worldwide net sales and revenues increased 5 percent to $8.29 billion for the fiscal second quarter, a 5-percent hike. For the six month period, worldwide net sales and revenue rose 4 percent to $13.9 billion. Net sales of equipment operations were $7.26 billion for the quarter, compared to $7.11 billion a year ago. For the first six months of the fiscal year, net sales of equipment operations were $11.96 billion compared to $11.88 billion a year ago.

“John Deere reported strong results in the second quarter as market conditions showed signs of further stabilization said Samuel Allen, chairman and CEO. “We are seeing modestly higher overall demand for our products, with farm machinery sales in South America experiencing a strong recover. Deere’s performance also reflects the sound execution of our operating plans, the strength of a broad product portfolio, and the impact of our actions to develop a more agile cost structure. As a result, we have raised our forecast and are now calling for significantly higher earnings for the full year.”

Net sales of the worldwide equipment operations increased 2 percent for the quarter and 1 percent for the first six months compared with the same periods a year ago. Sales included price realization of 2 percent for both periods. Equipment net sales in the United States and Canada decreased 5 percent for the quarter and 6 percent for the six-month period.

Deere’s equipment operations reported operating profit of $1.11 billion for the quarter compared with $688 million a year ago, a 61.3 percent leap. For the six months Deere posted $1.36 billion in operating profit compared with $902 million last year. The improvement for the quarter was primarily driven by price realization, Deere said, plus the impact of a favorable sales mix, partially offset by higher warranty costs.

The company expects equipment sales to increase about 9 percent for fiscal 2017 and about 18 percent for the third quarter compared with the same periods of 2016.

“Deere is demonstrating a continuing ability to produce impressive results through all phases of the business cycle,” said Allen. “The resilience illustrates our success driving improved operating efficiencies and developing a wider range of revenue sources. It also shows the impact of the company’s consistent investments in advanced technology, new products and additional markets.”

Construction and forestry sales increased 7 percent for the quarter an 1 percent for six months, mainly as a result of higher shipment volumes and price realization. Deere expects worldwide sales of construction and forestry equipment to be up about 13 percent for 2017, also it expects sales to decline about 5 percent in North America.