Deere Cuts 2015 Profit Outlook as Farmers Buy Less Machinery

February 23, 2015 06:04 AM
Deere Cuts 2015 Profit Outlook as Farmers Buy Less Machinery

Deere & Co., the largest maker of farm equipment, cut its 2015 earnings forecast as lower crop prices reduce farmer spending on high-horsepower tractors and combines in North America.

Net income will be about $1.8 billion in the fiscal year through October, Moline, Illinois-based Deere said Friday in a statement. That’s less than the company’s November projection for about $1.9 billion.

Farm income in the U.S., the top agricultural producer and exporter, will drop this year by the most since the Great Depression, according to the government. Deere has cut production and laid off hundreds of workers in the past year as it adjusts to lower demand in the U.S. and Canada, which together are its biggest market.

“The really big issue in agriculture is what’s happening in North America,” Mircea Dobre, a Milwaukee-based analyst for Robert W. Baird & Co., said in an interview on Thursday. “Retail sales are terrible. Large agriculture equipment is down significantly.”

Deere rose 0.8 percent to $92.43 at the close in New York, erasing an earlier decline.

Equipment sales in the three months through Jan. 31, Deere’s fiscal first quarter, dropped 19 percent to $5.61 billion.

Net income fell to $1.12 a share from $1.18 a year earlier. That beat the 83-cent average of 21 analysts’ estimates compiled by Bloomberg, helped by higher earnings from the company’s construction and forestry machinery segment.

Tractors, Combines

Deere said economic growth and more building in the U.S. will lift that unit’s revenue 5 percent in the full year.

For its agriculture and turf segment, the company’s largest, it’s a different story. Deere forecast sales there will fall about 23 percent for the year. The decline includes a drop of about 4 percent attributable to the stronger dollar.

“It is putting significant pressure on reported sales made outside of the United States, a fact reflected both in our first-quarter results and our full-year forecast,” Susan Karlix, a spokeswoman for Deere, said on a conference call to discuss earnings with analysts.

Industry-wide, the number of combines sold in the U.S. fell 25 percent in 2014, while sales of tractors with at least 100 horsepower declined 12 percent, according to data from the Association of Equipment Manufacturers.

Agco Corp., the world’s third-largest agricultural-equipment maker, said earlier this month it expects weaker demand and currency headwinds to make 2015 more challenging than 2014.

Corn has dropped more than 50 percent and soybeans declined more than 40 percent from record prices seen in 2012. U.S. farm income this year will decline in 2015 for a third straight year on lower receipts from crops and livestock, the government said earlier this month.

Warren Buffett’s Berkshire Hathaway Inc. increased its stake in Deere to 5 percent, according to a Tuesday filing.


Back to news



Spell Check

Old farmer
Worthington , MN
2/23/2015 04:42 PM

  Not a lot of diff. from one tractor to the next nowadays just the name, color and price.J.D. does demand the higher price, new or used. I've been accused of having green under wear,but if I were to purchase a bigger tractor I would go with a diff. brand due to cost. What tractor company has not been bought out numerous times since inception??Need help??JOHN DEERE--guess they been doing something right, Huh??

Donald Parchment
Paris, TN
2/23/2015 05:03 PM

  Deere cares nothing for customers only profits. They have forced out all of the small dealers to go to single multiunit dealers that they can cotrol more easily. This has eliminated competion so dealers can charge what they want with no fear of having to compete on price. Deere makes equipment so it is almost impossible for anyone but a dealer to work on and charge what they want. Deere tries to and does refuse warranty claims that should be their responsibilty and lets you pay for their mistakes. Glad I am old enough to not have to face purchasing any new equipment. Hope I can be around when Deere has the last man out the door turn the lights off for good.

Lakefield, MN
2/23/2015 07:03 PM

  Hey Old Farmer, That's the reason why Junk Deeres never went broke theres retards like you that know theres better more affordable products but still buy John deere. Name a product that john deere makes and theres another company that makes it better, there tillage is like a 4th grader designed it. Just remember the john deere didn't even design there first tractor they bought it the waterloo boy Agco has the best engine and transmission, then theres Deere that has went to Cummins engines because the cant get a motor over 350 hp to hold together with new emissions. John Deere wont go broke, But There dealers are, cant have 5-6 million of used equipment sitting around


Corn College TV Education Series


Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!


Market Data provided by
Brought to you by Beyer