Deere & Co. reported net income of $1.208 billion for the second quarter ended April 29 or $3.67 per share, compared with net income of $808.5 million, or $2.50 per share, for the quarter ended April 30, 2017, a 49.4-percent increase. For the first six months of its fiscal year, net income attributable to Deere & Co. was $673.2 million, or $2.05 per share, compared with $1.007 billion, or $3.14 per share, for the same period last year, a 33-percent drop.
Worldwide net sales and revenues increased 29 percent, to $10.720 billion, for the second quarter and rose 27 percent, to $17.633 billion, for six months. Net sales of the equipment operations were $9.747 billion for the second quarter compared with compared with $7.260 billion for the same period last year, a 34-percent leap. For the first six months of the fiscal year, net sales of the equipment operations were $15.721 billion compared to $11.958 for the period last year, a 31.5-percent hike.
"John Deere reported another quarter of strong performance helped by a broad-based improvement in market conditions throughout the world and a favorable customer response to our lineup of innovative products," said Samuel R. Allen, chairman and CEO. "Farm machinery sales in both North and South America are making solid gains and construction equipment sales are continuing to move sharply higher. During the quarter, Deere made significant progress working with its suppliers to ramp up production and ensure that products reach customers in a timely manner. At the same time, we are experiencing higher raw-material and freight costs, which are being addressed through a continued focus on structural cost reduction and future pricing actions."
Net sales of the worldwide equipment operations increased 34 percent for the quarter and 31 percent for the first six months compared with the same periods a year ago. Deere's acquisition of the Wirtgen Group (Wirtgen) in December 2017 added 12 percent to net sales for the quarter and 9 percent year to date. Sales included a favorable currency-translation effect of 3 percent for both periods. Equipment net sales in the United States and Canada increased 27 percent for the quarter and 26 percent year to date, with Wirtgen adding 5 percent and 3 percent for the respective periods. Outside the U.S. and Canada, net sales rose 45 percent for the quarter and 40 percent for the first six months, with Wirtgen adding 23 percent and 19 percent for the periods. Net sales included a favorable currency-translation effect of 7 percent for the quarter and 6 percent for six months.
Deere's equipment operations reported operating profit of $1.315 billion for the quarter and $1.734 billion for the first six months, compared with $1.120 billion and $1.375 billion, respectively, last year. Wirtgen, whose results are included in these amounts, had operating profit of $41 million for the quarter and an operating loss of $51 million year to date. The Wirtgen year-to-date operating loss was attributable to the unfavorable effects of purchase accounting and acquisition costs. Excluding Wirtgen results, the improvement for both periods was primarily driven by higher shipment volumes and lower warranty costs, partially offset by higher research and development expenses and higher production costs. The corresponding periods of 2017 included a gain on the sale of SiteOne Landscapes Supply Inc. Additionally, in the first six months of last year Deere incurred expenses associated with a voluntary employee-separation program.
Company equipment sales are projected to increase by about 30 percent for fiscal 2018 and by about 35 percent for the third quarter compared with the same periods of 2017. Of these amounts, Wirtgen is expected to add about 12 percent to Deere sales for the full year and about 18 percent for the third quarter. Also included in the forecast is a positive foreign-currency translation effect of about 1 percent for the year and third quarter. Net sales and revenues are expected to increase by about 26 percent for fiscal 2018 with net income attributable to Deere & Company forecast to be about $2.3 billion.
"We are encouraged by strengthening demand for our products and believe Deere is well-positioned to capitalize on further growth in the world's agricultural and construction equipment markets," Allen said. "This illustrates our success developing a more durable business model as well as the impact of investments in new products and businesses. We reaffirm our confidence in the company's present direction and our belief that Deere remains on track to deliver significant long-term value to customers and investors."
