Worldwide net sales and revenues declined 6% and net sales of the worldwide equipment operations decreased 7% for the quarter.
Equipment net sales in the United States and Canada declined 8% for the quarter. Net sales outside the U.S. and Canada were down 6%.
Deere's equipment operations reported operating profit of $315 million for the quarter, compared with $307 million last year. Lower raw-material costs, improved price realization and the favorable effects of foreign exchange and product mix were attributed for the improvement.
The company said global economic conditions remain stubbornly weak, and in response the company focuses on disciplined asset management. Trade receivables and inventories ended the quarter at $5.873 billion, representing a reduction of $1.439 billion, or 20%, from a year ago. Trade receivables and inventories at the end of the quarter were equal to 29% of previous 12-month sales compared with $7.312 billion, or 28% of sales, last year.
§ Agriculture & Turf. Sales declined 6% for the quarter largely due to lower shipment volumes, partially offset by the favorable effects of currency translation and improved price realization.
§ Construction & Forestry. Construction and forestry sales declined 15% for the quarter mainly due to lower shipment volumes, partially offset by favorable effects of currency translation.
Market Conditions & Outlook
Company equipment sales are projected to be up 6% to 8% for fiscal 2010 and up 4% to 6% for the second quarter compared with the same periods a year ago.
§ Agriculture & Turf. Across the industry, farm machinery sales in the United States and Canada are forecast to be comparable to 2009. Cash receipts and commodity prices have remained at healthy levels, which along with low interest rates are lending particular support to the sale of larger equipment. In other parts of the world, industry farm-machinery sales in Western Europe are forecast to decline 10% to 15% for the year mainly due to weakness in the livestock, dairy and grain sectors. Sales in Central Europe and the Commonwealth of Independent States are expected to remain under pressure as a result of challenging economic conditions and low levels of available credit. In South America, industry sales are projected to increase by 10% to 15% for the year as a result of a return to more normal weather patterns and improvement in the key Brazilian market. Conditions in Brazil are being supported by good prices for soybeans and sugarcane and the availability of attractive government-supported financing. Industry sales of turf equipment and compact utility tractors in the United States and Canada are expected to be roughly flat for the year as a result of sluggish U.S. economic conditions.
§ Construction & Forestry. Deere's worldwide sales of construction and forestry equipment are forecast to increase by about 21% for full-year 2010. Sales are expected to benefit from last year's aggressive inventory reductions, positioning the company to align production with retail demand in 2010. U.S. construction-equipment markets are forecast to remain deeply depressed for the year as a result of a decline in non-residential construction and relatively high used-equipment levels. Global forestry markets are expected to be stronger in relation to last year's extremely weak levels, driven by higher worldwide economic output and somewhat-improved U.S. housing starts.
§ Credit. Full-year 2010 net income attributable to Deere & Company for the credit operations is forecast to be approximately $260 million. The forecast increase from 2009 is primarily due to more favorable financing spreads.
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