John Deere’s World Headquarters in Moline is part of the global equipment-maker’s QC regional production complex. CREDIT JOHN SCHULTZ
Deere & Co. posted a net income of $1.751 billion, or $6.23 per share, in the quarter that ended Jan. 28, easily topping a consensus estimate by Zacks Investment Research analysts who predicted year-over-year Deere earnings at $5.19 per share. The net income released today by the Moline-based global equipment-maker compares to a net income […]
Deere & Co. posted a net income of $1.751 billion, or $6.23 per share, in the quarter that ended Jan. 28, easily topping a consensus estimate by Zacks Investment Research analysts who predicted year-over-year Deere earnings at $5.19 per share.The net income released today by the Moline-based global equipment-maker compares to a net income of $1.959 billion, or $6.55 per share for the first quarter in 2023. Year over year, the Feb. 15 John Deere earnings report said worldwide net sales and revenues decreased 4% in the quarter to $12.185 billion. In addition, net sales in the most recent quarter were $10.486 billion, down from $11.402 billion in 2023.Those totals, however, were ahead of Wall Street projections that analysts said were driven, in part, by concerns over lower farm income and lower crop prices in the quarter. On the heels of this morning’s report, Deere & Co. (DE) stock stood at $369.63 at 9:30 a.m. That was down $14.51, or 3.77%, since Wednesday's closing. But the stock remains well ahead of others in the industry, market observers report.Chairman and CEO John C. May said the ability of the company he leads to weather market and other pressures is due, in part, to an operating model which John Deere describes as focused on technology investment, aligning products and solutions and providing services to customers for the full lifecycle of their products.“Deere's first-quarter performance underscores the effectiveness of our Smart Industrial operating model and the dedication of our workforce, enabling improved performance across economic cycles that surpasses historical benchmarks,” Mr. May said in a new release that accompanied today’s earnings report.
Rural connectivity expanded
“Moreover, we remain committed to empowering our customers to improve their productivity and sustainability through ongoing investment in the next generation of solutions, as evidenced by our partnership on satellite communications to expand rural connectivity announced this quarter,” he added.Anticipated declines in new tractor sales this year also led the global agricultural and forestry equipment manufacturer to reduce its 2024 full-year net income outlook to be in the range of $7.50 billion to $7.75 billion. That compares to Deere’s November 2023 estimate that put profits at between $7.75 billion and $8.25 billion.John May“Moving forward, we expect fleet replenishment to moderate as agricultural fundamentals normalize from record levels in 2022 and 2023,” Mr. May said in the release. “Regardless of where we are in the cycle, demand is accelerating for products and solutions that empower our customers to do more with less, and we are uniquely positioned to deliver unparalleled value to our customers.”According to the news release, current strong quarterly operating margins from equipment operations also demonstrate structural improvement near mid-cycle volumes.Following the earnings report’s release, Yahoo Finance shared a report by GuruFocus Research. It said, “Deere & Co's earnings report is a testament to the company's resilience in the face of market headwinds. While the decrease in net income and sales presents challenges, the company's strategic focus on customer productivity and sustainability, along with its positive financial services performance, positions it to navigate the current economic landscape effectively.”
Q1 results by division
Overall, the company reported year-over-year declines across all sectors except its financial services division. Following is a summary of the company first-quarter results by division:
Production & Precision Agriculture: Sales decreased 7% year over year from $5.198 billion in Q1 2023 to $4.849 billion this year. Operating profits were $1.045 billion, down from $1.208 billion. Those declines were the result of lower shipment volumes, partially offset by price realization, the report said. Operating profit also decreased due to lower shipping volumes plus increased selling, general, and administrative (SA&G) expanses and research and development (R&D) expenses, which also were partially offset by price realization.
Small Agriculture & Turf: Sales fell to $2.425 billion from $3.001 billion in 2023 as a result of lower shipment volumes offset in part by price realization. Operating profit was $326 million, down from $447 million due to lower shipment volumes and higher SA&G and R&D expenses partially offset by price realization and lower production costs.
Construction & Forestry: Sales were relatively flat year over year. In Q1 2024, Deere recorded $3.212 billion in sales compared to $3.203 billion last year due to positive price realization offset by lower shipping volumes. Operating profit decreased to $566 million in 2024 compared to $624 million in Q1 2023 due to high production costs, lower shipment volumes, the unfavorable effects of currency translation and higher SA&G and R&D expenses. Those items were partially offset by price realization and a favorable sales mix.
Financial Services: Net income was $207 million compared to $185 million year over year due to higher than expected income earned on higher average portfolio balances offset by less-favorable financing spreads.
Those totals, however, were ahead of Wall Street projections that analysts said were driven, in part, by concerns over lower farm income and lower crop prices in the quarter.
On the heels of this morning’s report, Deere & Co. (DE) stock stood at $369.63 at 9:30 a.m. That was down $14.51, or 3.77%, since Wednesday's closing. But the stock remains well ahead of others in the industry, market observers report.
Chairman and CEO John C. May said the ability of the company he leads to weather market and other pressures is due, in part, to an operating model which John Deere describes as focused on technology investment, aligning products and solutions and providing services to customers for the full lifecycle of their products.
“Deere's first-quarter performance underscores the effectiveness of our Smart Industrial operating model and the dedication of our workforce, enabling improved performance across economic cycles that surpasses historical benchmarks,” Mr. May said in a new release that accompanied today’s earnings report.
