Farm equipment maker Deere and Company is announcing the end of another financially-solid quarter but officials remain cautious about various potential trouble spots around the globe effecting sales in the year ahead. During a webcast news conference this morning from corporate headquarters in the Quad Cities, Deere’s Tony Huegel ran down some of the numbers.
Huegel says “This morning, Deere reported fourth quarter net income of 277-million dollars on equipment operations net sales of four-point-five billion. This represents a 19-percent increase in income and a 25-percent increase in earnings per share versus the fourth quarter of 2005.” Huegel is Deere’s manager of investor communications. While many farmers are seeing comfortable profits due to decent weather and strong yields this growing season, Huegel says it doesn’t necessarily mean they’ll immediately be investing in new tractors.
Huegel says “While commodities prices are strong, this will take time to translate into equipment sales. Also, there are some concerns with industry levels of used ag equipment. For example, at Deere dealers, the used inventory we have visibility to was about 200-million dollars higher at 31 October versus the same time last year.”
Worldwide net sales and revenues for Deere increased three-percent for the quarter to five-point-one billion dollars and increased five-percent for the year to 22-billion. Huegel says sales of farm equipment are expected to be flat in the U.S. and Canada next fiscal year, compared to the just-ending year.
Huegel says “Our outlook is impacted by farmer uncertainty around the U.S. Farm Bill. As such, we anticipate weaker industry sales in the first half of 2007 with some recovery in the second half.” Deere officials are closely tracking farm equipment sales around the planet — in France, in Spain, and with a value-added tax increase in Germany that’s expected to benefit Deere’s first quarter. He says losses are expected in South America due to troubles in Brazil and a severe drought impacting crops in Australia may drop sales there 25-percent.
Huegel says “So what does all this mean for worldwide sales of John Deere farm machinery? We project Deere sales to be up about four-percent for the year with about three-percent lower production tonnage. For the first quarter 2007, we are forecasting Deere sales to be up about ten-percent, driven primarily by strength in Europe.” A full report on earnings is posted at “www.deere.com”.