The farm economy can be fickle and Iowa’s largest manufacturing employer is seeing a drop in sales of 3% for the quarter, blamed on continued uncertainty in agricultural sector.
Quad Cities-based Deere and Company released its financial report today in a conference call. Ryan Campbell, Deere’s senior vice president and chief financial officer, says momentum started building in 2017, indicating a rising demand from farmers for equipment replacement.
“North American customer sentiment has since deteriorated not only due to uncertainty over market access, but also due to weather and the demand impact of African swine fever,” Campbell says. “As these challenges persist, we are now beginning more aggressive action on our cost structure to create a more efficient and nimble organization.”
Deere is reporting net income of $899 million in the third quarter, compared to $910 million at this time a year ago.
“Note that we’ve increased our dividends by 25% over the last two years and further increases will be under consideration as we demonstrate progress to our increased profitability goals,” Campbell says. “During the quarter, we repurchased 400-million of stock and will continue to buy when we can create value for long-term shareholders.”
A Deere statement says sales in the agriculture and turf divisions fell for the quarter, while operating profit also declined primarily due to lower shipment volumes, higher production costs, and the unfavorable effects of foreign-currency exchange.
“We’ve significantly invested in next-generation large ag products and accelerated our precision ag initiatives,” Campbell says, “all the while, diversifying our construction and forestry division with the Wirtgen acquisition. Additionally, we increased our infrastucture spending to gain efficiencies and modernized systems that enhance our dealer and customer engagement.”
Deere has completed the $5 billion purchase of the Wirtgen Group, a leading manufacturer of road construction equipment.