Deere Reports Strong 3rd. Quarter Financial Performance

August 12, 2008 07:00 PM
An Farm Equipment Special

[Excerpted from Deere & Company's statement of Third Quarter financial performance reported to its investors.]

Thanks to strong global performance, Deere & Company has reported favorable Third Quarter financial results, in addition to a good first nine months of the company's fiscal year.

According to the company's quarterly performance statement to its investors, Deere & Company recorded worldwide net income of $575.2 million, or $1.32 per share, for the third quarter ended July 31, compared with $537.2 million, or $1.18 per share, for the same period last year. For the first nine months, net income was $1.708 billion, or $3.89 per share, compared with $1.400 billion, or $3.06 per share, last year.

Vigorous global farm sector drives 38% sales gain outside U.S. and Canada. Worldwide net sales and revenues increased 17 percent, to $7.739 billion, for the third quarter and were also up 17 percent, to $21.036 billion, for the first nine months. Net sales of the equipment operations were $7.070 billion for the quarter and $19.070 billion for nine months, compared with $5.985 billion and $16.066 billion for the respective periods last year.

Agricultural Equipment Division Performance. Sales increased 35 percent for the quarter and 34 percent for nine months, with the improvement in both periods due to higher shipment volumes, the favorable effects of currency translation, and improved price realization. Operating profit was $634 million for the quarter and $1.748 billion for nine months, compared with $431 million and $1.055 billion last year. Operating profit for both periods was higher primarily due to the favorable impact of higher shipment volumes and improved price realization, partially offset by higher raw material costs and higher selling, administrative and general expenses.

Market Conditions & Outlook:

Agricultural. With help from continuing strength in the global farm sector, worldwide sales of the company's agricultural equipment are forecast to increase by about 38 percent for full-year 2008. This includes about 8 percent related to currency translation.

Farm-machinery industry sales in the United States and Canada are forecast to be up 20 to 25 percent for the year, led by a substantial increase in large tractors and combines. Agricultural commodity prices remain at healthy levels and are lending continued support to farm income in the United States and other areas.

Industry sales in Western Europe are forecast to be up about 5 percent for the year. Greater increases are expected in Central Europe and the CIS (Commonwealth of Independent States) countries, including Russia, where demand for productive farm machinery is growing rapidly.

South American markets are showing further improvement with industry sales forecast to increase by about 40 percent for the year. Company sales in Brazil are being helped by an expanded product line, additional tractor capacity, and rising demand for sugarcane harvesting equipment. Deere's sales have moved significantly higher in Australia, where the farm sector is experiencing a strong recovery.

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