Despite a five-week UAW strike, a global pandemic, and persistent supply chain challenges driving earnings down, Deere & Co. Chairman and CEO John May reported an “impressive” performance that outdid net income estimates in the first quarter of 2022. The global agricultural equipment giant reported net income of $903 million, or $2.2 per share, for […]
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Despite a five-week UAW strike, a global pandemic, and persistent supply chain challenges driving earnings down, Deere & Co. Chairman and CEO John May reported an “impressive” performance that outdid net income estimates in the first quarter of 2022. The global agricultural equipment giant reported net income of $903 million, or $2.2 per share, for the quarter ended Jan. 30, 2022. Earnings dipped from the $1.224 billion, or $3.87 per share, reported for the same quarter in 2021, according to Deere’s earnings report released Friday, Feb. 18. Those results reflect “solid execution” in a “dynamic environment,” the Moline-based Deere said in a news release. The company noted, for example, that worldwide net sales and revenues increased 5% in the first quarter of 2022 to $9.569 billion. Equipment operations net sales also were $8.531 billion for the quarter, up from $8.051 billion in the same period in 2021. Credit for that, Mr. May said in a call Friday with stock analysts, “goes first to factory employees who did an outstanding job post-ratification of our labor agreement” in ramping up production. Deere’s dealers, too, were lauded for managing the delays and supply chain challenges to ensure farmers had the parts and equipment they needed to do the job. Despite ongoing supply shortages expected in the near future, the company also issued a rosier than expected earnings forecast for fiscal 2022. “Deere forecast fiscal 2022 net income between $6.7 billion and $7.1 billion, up from a prior estimate of $6.5 billion to $7.0 billion,” according to Reuters. Deere’s stock was down $11.63 to $369.03 in trading at noon Friday. In the analyst call, Deere leaders, including Mr. May, also focused on sustainability and the market growth expected through ongoing equipment electrification and autonomy expansion. That later will build on Deere’s Jan. 4 introduction of the first fully-autonomous tractor to rave reviews at the CES technology show in Las Vegas. “We've been working on autonomy the past few years and always, always knew it would offer a significant customer value, even greater than we imagined,” Mr. May said. “The demand for the solution is real.” So is the excitement among customers and dealers after the autonomous tractor’s introduction, and Deere will focus on getting the new technology into the hands of its customers, Mr. May said. In the earnings release, he also said “Looking ahead, we expect demand for farm and construction equipment to continue benefiting from strong fundamentals. At the same time, we are excited about the opportunities to create value for our customers and other stakeholders as outlined in our goals. Because of the hard work that has been done executing the Smart Industrial operating model, we are leveraging technology that delivers improved customer profitability, productivity, and sustainability.” Those new goals, known as Leap Ambitions, are linked to the company’s Smart Industrial Strategy and operating model introduced in 2020, and updated in 2022, Deere said. It expects to work toward completing those goals by the end of this decade. They are contained in the Deere & Co. Sustainability Report also released Friday. “The measures of our strategy,” the report said, are designed to boost economic value and sustainability for Deere’s customers, as well as for employees, investors, and other stakeholders. That sustainability strategy focuses on “delivering intelligent, connected machines and applications that will revolutionize production systems in agriculture and construction, unlocking customer economic value across the lifecycle in ways that are more sustainable for all.” Among the 2026 goals contained in that plan are:
- Delivering 20-plus electric and hybrid-electric product models.
- Ensuring 100% of new small ag equipment is connectivity-enabled.
- Offer an electric option in each turf and compact utility tractor product family.
- Deliver a fully autonomous, battery-powered electric ag tractor to the market.
- Increasing SmartGrade grade control earthmoving adoption to 50%.
- Boosting intelligent boom control adoption in forestry to 100%.
- Increasing precision road building solutions adoption to 85%.
- Connecting 1.5 million machines.
- Demonstrating viable low or no-carbon alternative power solutions .
- Growing enterprise recurring revenue to 10% by 2030.
- Reaching 500 million engaged acres (acres actively delivering data through Deere’s digital tools) with 50% highly-engaged.
- Ensuring 75% of engaged acres are sustainably engaged acres.
- Improving nitrogen use efficiency by 20%.
- Increase crop protection efficiency by 20%.
- Reducing 15% of customer CO2e (carbon dioxide equivalent) emissions.
- Improving total recordable incident rate by 20%.
- Achieving 95% recyclable product content.
- Ensuring 65% of product content is sustainable material.
- Growing 50% in remanufacturing revenue.
- Reducing 50% of operational CO2e emissions.
- Reducing 30% of upstream and downstream CO2e emissions.
- Reducing 15% of waste intensity.
- Reducing 10% freshwater consumption intensity at water-stressed manufacturing locations.