John Deere reports decline in sales and earnings

A drop in agriculture equipment sales led to a dip in John Deere earnings in the last quarter.

Deere continues to foretell decrease industrywide gross sales throughout nearly all its geographic markets and sees a worsening market in South America, the place Deere now expects gross sales to drop by between 20% and 25% this yr due to weak demand in Brazil.

General, the corporate reported a revenue of $511.6 million, or $1.53 a share, down from $850.7 million, or $2.33, a yr earlier.

The company’s Agriculture & Turf Division, which includes its Waterloo Works and accounts for more than two-thirds of total revenue, dropped 24 percent, to $5.31 billion, for the quarter and 25 percent in the previous nine months. Sales declined as a result of lower shipment volumes and unfavorable currency translations, partially offset by price realization. The company earned $6.84 billion during the quarter, compared to analyst estimates of $7.17 billion.

Deere has done well to maintain profits even during the farm economy swoon, said Jim Corridore, equity analyst with S&P Capital IQ.

Early orders for planters, sprayers and tillage equipment are down in the fiscal year that begins in November, Tony Huegel, Deere’s director of investor relations, said Friday on a conference call with investors. “The economic indicators are strong for construction equipment such as U.S. housing starts are expected to exceed 1 million units this year, hiring in construction is on the increase, overall unemployment is falling, and GDP growth is positive”, he said. Outside the U.S. and Canada, net sales slid 23 percent for the quarter and 26 percent for nine months, with unfavorable currency-translation effects of 12 percent and 9 percent for the periods.

Golden said it is that long-term view that Deere must maintain. “Unfavorable growing conditions in any key region of the world, as well as known impacts from any geopolitical tensions, could disrupt trade, lower production, reduce the stocks-to-use ratio and result in commodity prices moving higher”.

Deere fell 8.1 percent to $83.29 in New York, the biggest drop since March 2009. The stock had a year-on-year range of $98.23, which it reached June 30, and $78.88, October 8, 2014.