Deere’s 4th Quarter Results

November 26, 2008 10:46 AM
 

Deere & Company announced worldwide net income of $345.0 million, or $0.81 per share, for the fourth quarter ended October 31, compared with $422.1 million, or $0.94 per share, for the same period last year. For the full year, net income was a record $2.053 billion, or $4.70 per share, compared with $1.822 billion, or $4.00 per share, last year.

Worldwide net sales and revenues increased 21 percent, to $7.401 billion, for the fourth quarter and were up 18 percent, to $28.438 billion, for the full year. Net sales of the equipment operations were $6.734 billion for the quarter and $25.803 billion for the full year, compared with $5.423 billion and $21.489 billion for the respective periods last year.

Net sales of the worldwide equipment operations increased 24 percent for the quarter and 20 percent for the year. Included were positive effects for currency translation and price changes of 3 percent for the quarter and 6 percent for the full year. Equipment net sales in the United States and Canada were up 16 percent for the quarter and 9 percent for the full year. Net sales outside the United States and Canada increased by 39 percent for the quarter and 40 percent for the year, including a positive currency-translation effect of 10 percent for the year.

In spite of the present economic situation, Deere remains encouraged by its growth prospects and believes that trends favorable to its businesses remain intact. These trends include increasing global demand for farm commodities and renewable fuels, as well as a growing need over time for shelter and infrastructure.

"We're proceeding with investments to capitalize on these positive developments," said Robert W. Lane, chairman and chief executive officer. "They continue to hold considerable promise, in our view, and should bring benefit to the company and its investors for years to come."

Agricultural Equipment Division Performance

Sales increased 43 percent for the quarter and 37 percent for the full year, with improvement in both periods due to higher shipment volumes and improved price realization. The favorable effects of currency translation also contributed to the full-year sales increase. Operating profit was $476 million for the quarter and $2.224 billion for the full year, compared with $388 million and $1.443 billion for the respective periods 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 increases in selling, administrative and general expenses and research and development costs. Also affecting the quarter were expenses to close a facility in Canada.

Agricultural Market Conditions & Outlook

The outlook for the coming year is highly uncertain and its impact on John Deere's various businesses is unusually difficult to assess at this time.

Worldwide sales of the company's agricultural equipment are forecast to increase by about 5 percent for full-year 2009. This includes a negative currency-translation impact of about 8 percent.

Farmmachinery industry sales in the United States and Canada are forecast to be up about 5 percent for the year, led by an increase in large tractors and combines. The company expects agricultural commodity prices to remain at healthy levels in 2009, though below the previous year, while costs moderate for key inputs such as fuel and fertilizer. Sales of cotton equipment, small tractors, and equipment commonly used by livestock producers are expected to be lower.

Industry sales in Western Europe are forecast to be down 5 to 10 percent for the year. Sales are expected to be down moderately in Central Europe and the CIS (Commonwealth of Independent States) countries, including Russia. While demand in these areas for highly productive farm equipment remains good, sales will depend on the availability and cost of credit. Sales in South American markets are expected to be down 10 to 20 percent in 2009, with the decline related to credit access in Brazil and drought conditions in Argentina.

For More Information:
John Deere



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