Quad Cities-based Deere and Company is reporting favorable second quarter earnings, despite Iowa farmers facing significant challenges from foul weather, poor commodity prices and international trade troubles.
During a conference call this morning, Brent Norwood, Deere’s manager of investor communications, detailed the outlook for Iowa’s largest manufacturing employer. “John Deere completed the second quarter with solid results despite uncertain conditions in the agricultural sector,” Norwood says. “While near-term ag markets remain challenging in the U.S., foreign markets, such as Brazil, show signs of strength. Additionally, the ag division continues to make solid progress, advancing our technology investments and innovative new product programs.”
While the persistent uncertainty in agricultural markets weighs on the outlook, Norwood says other sectors of Deere’s diverse portfolio are performing very well. “In construction and forestry, in-market demand remained strong, resulting from broad-based industry drivers such as GDP growth, oil and gas activity and infrastructure investment,” Norwood says. “With orders booked extending into the fourth quarter, the division is on a track for a solid finish to the year.”
A Deere news release says the ag sector is weighed down by ongoing concerns about export market access, near-term demand for commodities like soybeans, and a delayed planting season in much of North America. That’s causing farmers to become much more cautious about making major purchases. Still, Norwood says the company’s second quarter shaped up well.
“Net sales and revenues were up 6% to $11.3-billion. Net income attributable to Deere & Company was $1.135-billion or $3.52 per diluted share,” Norwood says. “Total worldwide equipment operations net sales were up 5% to 10.273-billion.” Deere officials have revised the full-year earnings forecast to $3.3 billion on a sales increase of about five-percent.
The release says: “Although the long-term fundamentals for our businesses remain favorable, softening conditions in the agricultural sector have led Deere to adopt a more cautious financial outlook for the year.”