John Deere hosted its first quarter conference call and reported earnings of $204 million.
The details revealed during the call provided insight into the current machinery market.
U.S. and Canadian ag sales continued at a strong pace. Net ag sales worldwide were up 18% due to higher volumes in U.S., Canada and Western Europe in the first quarter.
The company cites strong U.S. farm cash receipts for maintaining a positive ag market. Although one exception is cotton equipment sales have deteriorated since their November outlook. The recent stimulus package is encouraging for Deere with its provisions for increased infrastructure projects, extension of bonus depreciation and the extension of section 179 through 2009.
Order cancellations have varied across the globe. In North America and Western Europe the company reports very few order cancellations. However, in South America a mix of issues including drought and credit tightening has brought more cancellations than typical. In Central Europe, CIS countries and Russia there have been a high level of order cancellations because of a severe lack of credit.
As for ag retail sales for Fiscal Year 2009 Deere expects the following: U.S./Canada up 5%; South America down 15 to 25%; Western Europe down 10 to 15% and Central Europe, CIS countries and Russia down significantly. Every region except the U.S. and Canada have had their forecast decreased further since the last report.
In their other markets, construction and forestry equipment sales are down 24% in 2009, whereas previous forecasts expected only a 12% decline. As for consumer and commercial equipment, sales for 2009 are forecasted to be down low double digits.