Deere Reports Record Fourth-Quarter Earnings Of $688 Million

Net income attributable to Deere & Co. was $687.6 million, or $1.75 per share, for the fourth quarter ended October 31, compared with $669.6 million, or $1.62 per share, for the same period last year.

For fiscal 2012, net income attributable to Deere & Co. was $3.065 billion, or $7.63 per share, compared with $2.800 billion, or $6.63 per share, in 2011.

Worldwide net sales and revenues rose 14%, to $9.792 billion, for the fourth quarter and increased 13% to $36.157 billion for the full year. Net sales of the equipment operations were $9.047 billion for the quarter and $33.501 billion for the year, compared with $7.903 billion and $29.466 billion for the same periods in 2011.

“In the face of continuing global economic pressure, John Deere has completed another record year,” said Samuel R. Allen, Deere chairman and CEO. “Our success reflects positive customer response to our lines of innovative equipment coupled with extensive efforts to expand our global competitive position.”

During the year, Deere continued with the record introduction of new products, while opening or moving ahead with new factories in China, India, and Brazil. In the U.S., the company announced capacity expansions for tractors, sprayers, and cylinders.

“John Deere’s performance illustrates the continuing impact of our operating model, which stresses a disciplined approach to cost and asset management,” Allen said. “As a result, we are achieving strong financial results and generating high levels of cash flow. These dollars are funding growth activities throughout the world and providing value directly to investors.”

Summary Of Operations

Net sales of the worldwide equipment operations increased 14% for the fourth quarter and full year compared with the same periods in 2011. Sales included price realization of 4% and an unfavorable currency-translation effect of 3% for both periods. Equipment net sales in the U.S. and Canada increased 26 percent for the quarter and 20 percent for the year. Outside the U.S. and Canada, net sales decreased 2 percent for the quarter and increased 5 percent for the year, with unfavorable currency-translation effects of 7 percent and 6 percent for these periods.

Deere’s equipment operations reported operating profit of $1.051 billion for the quarter and $4.397 billion for the full year, compared with $955 million and $3.839 billion for the same periods in 2011. The improvement in the quarter was primarily due to the impact of higher shipment volumes and price realization. These factors were partially offset by higher production costs and increased selling, administrative and general, and research and development expenses. Also affecting results was a goodwill impairment charge related to the company’s John Deere Water reporting unit and unfavorable effects of foreign currency exchange.

Full-year results improved primarily due to the impact of price realization and higher shipment volumes. Partially offsetting these factors were higher production and raw-material costs, unfavorable effects of foreign currency exchange, and increased research and development, and selling, administrative and general expenses. The increase in production costs for both periods was primarily related to new products, engine-emission requirements and incentive compensation expenses.

Net income of the company’s equipment operations was $576 million for the fourth quarter and $2.616 billion for the full year, compared with $552 million and $2.329 billion in 2011. The same operating factors mentioned above, along with a higher effective tax rate and increased interest expense, affected both quarterly and annual results.

Financial services reported net income attributable to Deere & Co. of $121.7 million for the quarter and $460.3 million for the year compared with $122.1 million and $471.0 million in 2011. Results were slightly lower for the quarter primarily due to higher reserves for crop insurance claims, increased selling, administrative and general expenses, a higher provision for credit losses and narrower financing spreads. These factors were almost entirely offset by growth in the credit portfolio. Fiscal-year 2012 results were lower primarily due to increased selling, administrative and general expenses, higher reserves for crop insurance claims and narrower financing spreads, partially offset by growth in the credit portfolio and a lower provision for credit losses.

Company Outlook & Summary

Company equipment sales are projected to increase by about 5% for full year 2013 and to be up about 10% for the first quarter compared with the same periods of 2012. For fiscal 2013, net income attributable to Deere & Company is anticipated to be about $3.2 billion.

“Deere remains well-positioned to carry out its growth plans and capitalize on positive long-term trends, even though present global economic and fiscal concerns warrant continued caution,” Allen said. “With support from a highly committed group of employees, dealers and suppliers, our plans for helping meet the world’s growing need for food and infrastructure are moving ahead and achieving a good deal of success.

“We are proud of the company’s performance in 2012 and look forward to building on these gains in 2013 and beyond. Despite fragile economic conditions in many regions, we have great confidence in the company’s prospects and in our ability to deliver value to investors and other stakeholders in the future.”

Equipment Division Performance

Agriculture & Turf. Sales increased 16% for the quarter and 13% for the year largely due to higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation.

Operating profit was $931 million for the quarter and $3.921 billion for the year, compared with $868 million and $3.447 billion, respectively, in 2011. The improvement in both periods was primarily due to the impact of higher shipment volumes and price realization. Results in the quarter were partially offset by higher production costs and increased selling, administrative and general, and research and development expenses. Also affecting fourth-quarter performance was a goodwill impairment charge and unfavorable effects of foreign currency exchange. For the full year, results were partially offset by higher production and raw-material costs, unfavorable effects of foreign currency exchange, and increased research and development, and selling, administrative and general expenses.

Construction & Forestry. Construction and forestry sales increased 7% for the quarter and 19% for the year mainly due to higher shipment volumes and price realization. Operating profit was $120 million for the quarter and $476 million for the year, compared with $87 million and $392 million, respectively, in 2011. Results increased for both periods primarily due to the impact of price realization and higher shipment volumes. These factors were partially offset by increased production costs and higher selling, administrative and general expenses. In addition, higher raw-material costs and increased research and development expenses affected the year.

Market Conditions & Outlook

Agriculture & Turf. Deere’s worldwide sales of agriculture and turf equipment are forecast to increase by about 4% for fiscal year 2013. Relatively high commodity prices and strong farm incomes are expected to continue supporting a favorable level of demand for farm machinery during the year. Deere’s sales are expected to benefit from global expansion and lines of advanced new equipment.

Industry sales for agricultural machinery in the U.S. and Canada are forecast to be about flat for 2013 in relation to the prior year’s healthy levels. Caution around the U.S. livestock and dairy sectors is expected to offset continued strength in demand for large equipment such as high-horsepower tractors.

Full-year industry sales in the EU27 are forecast to be flat to down 5% due to continuing deterioration in the overall economy and a poor harvest in the U.K. Sales in the Commonwealth of Independent States are expected to be modestly higher in 2013.

In South America, industry sales are projected to be up about 10% as a result of favorable commodity prices and higher planting intentions. Industry sales in Asia are projected to be little-changed from 2012 due to softer economic conditions in India and China.

U.S. and Canada industry sales of turf and utility equipment are expected to be up about 5% for 2013, reflecting some improvement in the U.S. economy. Deere’s sales are expected to increase more than the industry due to the impact of new products.

Construction & Forestry. Deere’s worldwide sales of construction and forestry equipment are forecast to increase by about 8 percent for fiscal 2013 due in part to modest improvement in U.S. economic conditions. Sales in world forestry markets are projected to be about flat for the year as further weakness in European markets offsets stronger demand in the U.S.

Financial Services. Fiscal-year 2013 net income attributable to Deere & Company for the financial services operations is expected to be approximately $500 million. The forecast improvement is primarily due to expected growth in the credit portfolio and lower crop insurance claims. These factors are projected to be partially offset by an increase in the provision for credit losses, which is anticipated to return to a more typical level.

Leave a Reply

Sprayers Stories

Patriot 4440 Sprayer close up
ManagementFlashing Back And Moving Forward On Spray Drift
May 3, 2016
The potential for pesticide drift remains an unavoidable feature of modern agriculture. Here, too, history repeats itself. “When Roundup debuted, Read More
R4023 Sprayer, John Deere
EquipmentDeere’s Acquisition of Hagie: 3 Things We Learned
March 29, 2016
It seems like the biggest news stories in agriculture always break on a Tuesday. Today John Deere announced it had Read More
EquipmentDeere Acquires Majority Stake In Hagie Manufacturing
March 29, 2016
Deere & Company has entered a joint venture with Hagie Manufacturing, the U.S. market leader in high-clearance sprayers. In the Read More
GVM E-Series cab
SprayersSprayer Cabs: An Inside Look At 11 First-Class Rides In 2016
January 19, 2016
Today’s sprayer cabs offer operators a host of essential equipment — and creature comforts. Features such as LED lighting, panoramic views, Read More
Trending Articles
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To Explore IT Solutions
June 20, 2016
Silicon Valley is hot on agriculture, and an upcoming event in California will bring together the food and tech industries Read More
Monsanto Luling Plant
Eric SfiligojWhat’s Next For Monsanto?
May 31, 2016
For the folks at Monsanto’s headquarters in St. Louis, MO, it has been an eventful few weeks. Back on May Read More
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Eyeing Monsanto For Possible Mega-Merger
May 16, 2016
Bayer AG is exploring a potential bid for U.S. competitor Monsanto Co. in a deal that would create the world’s Read More
Aerial Drone
Precision AgA Deeper Dive Into The Future Of Precision Ag
May 9, 2016
For about two decades now, through the good and the bad times, the ups and the downs inherent in agriculture, Read More
Latest News
Allen Summers Asmark Institute PSM Training
EmployeesAsmark Institute Sponsors 25 ResponsibleAg Auditor Trai…
June 21, 2016
The Asmark Institute has announced plans to provide 25 scholarships through their affiliated State fertilizer and agrichemical associations to help encourage Read More
Kennebec Elevator
CropLife 100Wheat Growers Celebrates Kennebec Elevator Grand Openin…
June 21, 2016
Over 250 patrons and guests were on hand to celebrate Wheat Growers’ Kennebec Elevator grand opening. South Dakota Secretary of Read More
Land O Lakes
Industry NewsLand O’Lakes To Acquire Ceres
June 20, 2016
Land O’ Lakes, Inc. and Ceres, Inc. have announced that they have signed a definitive merger agreement under which Land O’Lakes Read More
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To …
June 20, 2016
Silicon Valley is hot on agriculture, and an upcoming event in California will bring together the food and tech industries Read More
LegislationVilsack Christens WinField Crop Adventure, Talks Monsan…
June 17, 2016
The WinField Crop Adventure grand opening ceremonies at Fair Oaks Farms (near Winemac, IN) welcomed USDA Secretary of Agriculture Tom Read More
Crop InputsFields of the Future: WinField Doubles Down with Agri-E…
June 16, 2016
Land O’Lakes, Inc., joined by Agriculture Secretary Tom Vilsack, today will host Fields of the Future, a live broadcast about Read More
Bayer sign
Crop InputsMonsanto Turns Back Bayer Again
June 14, 2016
Bayer AG’s bid to buy Monsanto Co. for more than $60 billion has hit an impasse that could pose a Read More
Young Corn Field
Crop NutritionNext Generation Of Nitrogen Efficiency Technology Conve…
June 13, 2016
Commodity price projections indicate farmers will continue to face tight margins again this year. Delivering higher yields and more bushels Read More
Industry NewsLa Crosse Seed Acquires Cover Crop Solutions Brand
June 10, 2016
La Crosse Seed announces that it is the new and exclusive owner of the entire family of brands of Cover Read More
ManagementTravel Plans and EU Rejection of Glyphosate, Biotech Cr…
June 9, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about upcoming trips and the latest in the European Union’s moves against glyphosate Read More
Aspire with Boron
Crop InputsStudy: Aspire with Boron Ups Alfalfa Yields
June 8, 2016
Alfalfa growers are successfully improving yields through the cutting season by applying an important micronutrient. In a recent study, The Read More
Industry NewsAGCO Announces Tragic Death of Longtime Employee
June 8, 2016
It is with deepest regret that we announce the passing of our dear friend, colleague and customer advocate-in-chief Kevin W. Read More
Wheat Field North Dakota
Industry NewsBASF Inks Northern Seed for Clearfield Wheat R&D Li…
June 6, 2016
BASF has licensed Northern Seed LLC to perform research and development of BASF’s proprietary and patented Clearfield technology in wheat. Read More
ManagementBayer/Monsanto, EU/Glyphosate, Corn/Soybeans
June 2, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss the latest regarding industry mergers, the glyphosate debate in Europe, and an update Read More
Growers looking at soybeans
Industry NewsKoch Licenses 2 Marrone Products For North American Dis…
June 2, 2016
Koch Agronomic Services (Koch), with support from its affiliate, Koch Biological Solutions, has secured exclusive rights to sell REGALIA Rx Read More
Gypsum
Industry NewsBeneficial Reuse Management Launches GYPSOIL BLENDABLE
June 2, 2016
Beneficial Reuse Management (BRM) has introduced GYPSOIL BLENDABLE, a new high-quality pelleted gypsum fertilizer that supplies 17% sulfate sulfur and Read More
StewardshipAgrible Joins Field To Market To Pursue Sustainable Sou…
June 1, 2016
Agrible, Inc. has joined Field to Market: The Alliance for Sustainable Agriculture as an associate member. As a leading multi-stakeholder Read More