John Deere posted a “remarkable” 2023 and outstanding financial results in a year that also saw robust demand for its products, John C. May, board chair and president of the Moline-based global equipment maker, told shareholders today. In a statement that led off Deere & Co.’s Feb. 28 virtual meeting – the fourth to be […]
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John Deere posted a “remarkable” 2023 and outstanding financial results in a year that also saw robust demand for its products, John C. May, board chair and president of the Moline-based global equipment maker, told shareholders today.John MayIn a statement that led off Deere & Co.’s Feb. 28 virtual meeting – the fourth to be conducted virtually – Mr. May also said last year Deere brought to market important new products and made strategic investments that advanced its smart industrial strategy and is helping achieve John Deere’s Leap Ambitions. “Overall,” he told shareholders, “2023 was a remarkable year for us.” For example, he said, in 2023 Deere recorded net sales and revenues of $61.3 billion, a 16% increase over 2022. Net income reached $10.2 billion, easily beating last year’s $7.1 billion total. And profitability also reached “impressive levels,” with equipment operations delivering “a robust 21.98% operating margin,” he added.“This is significant for two reasons,” Mr. May said during the virtual meeting. “First, this success was achieved despite ongoing inflation pressures and market fluctuations. Second, it is crucial in allowing us to continue investing in the next generation of solutions for our customers."“In fact,” he added, “all of our equipment operating segments set new highs this year in both sales and profits.”
Growth in all sectors
He credited strong execution across all equipment operating segments for 2023’s success. That started with Deere’s production and precision ag business which recorded net revenue of $26.8 billion while delivering an “exceptional operating margin performance” that increased by more than 26% for the year.Small ag and turf also saw revenue grow to $14 billion, with operating profits exceeding $2.4 billion, the chairman and CEO said. And construction and forestry equipment revenue was $14.8 billion with operating profit of $2.7 billion. Growth was driven by strong performance from both earthmoving and road building business. John Deere’s financial services also added $619 million in net income this year.Deere’s success also generated significant cash flow, allowing it to invest at record levels in the business and its tech stack, Mr. May said. In addition, Deere returned value to shareholders through share stock repurchases of over $7 billion while also increasing the quarterly dividend by nearly 20%.Mr. May also credited the company’s smart industrial strategy and operating model for Deere’s ability to deliver those significant outcomes. “Through this strategy we are dedicated to empowering our customers to enhance their productivity, profitability and sustainability,” he said. “In addition we continue to see improvement in the supply chain, contributing to lower material and logistics costs compared to 2022.”He also touted the commitment and perseverance of Deere’s global workforce. “That is particularly evident in our factories where exceptional execution has driven increased production levels, allowing us to deliver machines on time and in advance of our customers seasonal usage demands,” Mr. May said.
Technology in spotlight
And he applauded Deere’s dealers who continue to make progress in serving their farmer customers through strengthening their technical capabilities and using digital tools, “both of which are key to enabling the widespread adoption of precision technologies and unlocking more value for our customers.”Mr. May also spotlighted updates in services and equipment in 2023. They include the company’s groundbreaking planting strategy called Exact-Shot, which he said reduces the amount of starter fertilizer applied to the seed during planting by more than 60%. In addition, Mr. May said, Deere will use the advanced camera detection and artificial intelligence technology from its revolutionary See and Spray system to make a precision upgrade available for sale in 2024.“This retrofit solution makes it possible to apply the latest technology to previous generation sprayers, allowing even more customers to reduce their herbicide use, lower their cost and minimize impact on their crops and land,” Mr. May said. The company also used the technology to enhance air-blast sprayers used in orchards, vineyards and tree nurseries.
Construction gets boost
Also new this year were products and upgrades to support Deere’s construction and forestry customers including a new line of excavators – optimized for increased productivity, efficiency and reduced CO2 emission – that has been well received, Mr. May said.For construction customers, for example, Deere is looking to expand its operation center to include roadbuilding equipment, unlocking enhanced operational analysis, monitoring and project planning opportunities for project planning opportunities for our construction customers, he said. “This is a key step in the journey to digitizing job sites as we have already done for our customers’ farms.”Mr. May also highlighted new products including a hybrid e-drive loader expected to be available to customers this year. Deere also is creating a new service business model that accelerates adoption and use of technology to drive better outcomes for its customers. “This change involves transitioning service solutions from a traditional upfront one-time purchase model to a use-based structure by shifting costs from the initial sale to technology purchase,” he said. Essentially, customers would pay based on their specific operational needs. “These products and investments are all examples of how we're helping customers do more with less and they are just a few of the many that are transforming our industry by bringing advanced capabilities to our customers that would have been considered all but unimaginable not not that ago.”The company also is implementing a new “people strategy” to attract and retain talent by delivering an “unmatched employee experience,” he said.
Foundation celebrated
He also noted the 75th anniversary of the John Deere Foundation in 2023. Since 1948, that organization has invested more than $400 million in nonprofit organizations, Mr. May said. Remarkably, he added, in the past five years alone, it donated $100 million to those community organizations, including a $19 million investment in 2023 alone aimed at eliminating hunger.“Looking ahead, Mr. May said, “we expect more variability across our business in 2024. But while markets may fluctuate due to global economic uncertainties, geopolitical instability and even the weather, rest assured we remain laser focused on managing through the challenges and executing on the things we can control.”He added: “I firmly believe John Deere’s best days lie ahead. We’re part of a great company that does great things. I am proud of our 83,000 dedicated employees as well as our many dealers and suppliers. Their collective efforts were essential in making 2023 such a memorial.”
Deere board re-elected
The board’s presiding director since 2020, Charles O. “Chad” Holliday, Jr., the retired chairman and CEO of Dupont, also retired effective during today’s annual meeting. At the meeting, Mr. May lauded Mr. Holliday for his 15 years of service on the board. Board member Sherry M. Smith was selected in February to take the presiding director post. She was among the 11 Deere board of directors re-elected by shareholders today. Those re-elected today were:
Leanne G. Caret, 57, retired executive vice president, The Boeing Co. and former president & CEO of Boeing Defense, Space & Security. She was first appointed to the board in 2021.
Tamra A. Erwin, 59, retired senior advisor, Verizon Communications, Inc. and former executive vice president and Group CEP, Verizon Business Group. She joined the board in 2020.
Alan C. Heuberger, 50, senior investment manager, Cascade Asset Management Co. He joined the board in 2016.
Neil Hunn, 51, president & CEO Roper Technologies, Inc. He joined the board in 2023.
Michael O. Johanns, 73, retired U.S. senator from Nebraska, former U.S. secretary of agriculture. He joined the board in 2015.
Clayton M. Jones, 74, retired chairman of Rockwell Collins, Inc. He joined the board in 2007.
John C. May, 54, chairman, CEO and president of Deere & Co. He joined the board in 2019.
Gregory R. Page, 72, chairman, Corteva, Inc. He joined the board in 2013.
Sherry M. Smith, 62, former executive vice president and CFO, SuperValu Inc. She joined the board in 2011.
Dimitri L. Stockton, 59, retired special advisor to the chairman and special vice president, GE, and former chairman, president & CEO, GE Asset Management. He joined the board in 2015
Sheila G. Talton, 71, president & CEO, Gray Matter Analytics. She joined the board in 2015.
