Agribusiness

John Deere reports lift in second quarter earnings

Grain Central, May 26, 2017

MACHINERY manufacturer John Deere has reported net income of US$802.4 million, of US$2.49 per share, for the second quarter ended April 30, 2017, compared with US$495.4 million, or US$1.56 per share, for the period ended May 1, 2016.

For the first six months of the year, net income attributable was US$996.2 million, or US$3.10 per share, compared with US$749.8 million, or US$2.36 per share, last year.

The company reported worldwide net sales and revenues increased 5 per cent, to US$8.287 billion, for the second quarter and increased 4pc, to US$13.912 billion, for six months.

Net sales of the equipment operations were US$7.260 billion for the quarter and US$11.958 billion for the first six months, compared with US$7.107 billion and US$11.876 billion for the same periods last year.

“John Deere reported strong results in the second quarter as market conditions showed signs of further stabilisation,” John Deere chairman and chief executive officer, Samuel R. Allen, said.

“We are seeing modestly higher overall demand for our products, with farm machinery sales in South America experiencing a strong recovery. 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.”

Worldwide equipment sales

Net sales of the worldwide equipment operations increased 2pc for the quarter and 1pc for the first six months compared with the same periods a year ago.

Equipment net sales in the United States and Canada decreased 5pc for the quarter and were down 6pc for the first six months.

Outside the US and Canada, net sales increased 14pc for the quarter and 13pc for the first six months, with no material effect of currency translation in either period.

John Deere’s equipment operations reported operating profit of US$1.111 billion for the quarter and US$1.358 billion for six months, compared with US$688 million and US$902 million, respectively, last year.

The improvement for the quarter was primarily driven by price realisation, the impact of a favourable sales mix, favourable effects of foreign-currency exchange and higher shipment volumes, partially offset by higher warranty costs. Improved year-to-date results benefited from price realisation, a favourable sales mix, and higher shipment volumes, partially offset by expenses associated with the previously announced voluntary employee-separation program and higher warranty costs.

Company outlook

Company equipment sales are projected to increase about 9pc for fiscal 2017 and to rise about 18pc for the third quarter compared with the same periods of 2016.

Source: John Deere

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