John Deere says the U.S. farm sector is beginning to recover as farmer confidence improves with a relaxation of trade tensions and higher ag exports. Brent Norwood, Deere’s manager of investor communications, summarized the sales figures.
“Enterprise net sales and revenues were down 4% to about $7.6 billion,” Norwood says, “while net sales for our equipment operations were down 6% to about 6.5-billion.” Deere’s net income for the quarter rose to $517 million, compared to $498 million in the first quarter last year. While many Iowa growers encountered a series of setbacks from flooding last year, farmers across the region have endured several years of financial challenges due to trade troubles.
Norwood says diplomatic resolutions in Washington are helping to bolster attitudes. “John Deere completed the first quarter with a solid performance and sees early signs of stabilization for the U.S. ag industry,” Norwood says. “Sentiment improved as some progress was made addressing market access for U.S. farmers through the passage of USMCA and the Phase One trade agreement with China.”
Focusing on Deere’s two largest divisions, sales of farm equipment fell four-percent in the quarter, while construction and forestry dropped 10%. “Markets such as Brazil got off to a slower start even as underlying fundamentals and farm production remains high,” Norwood says. “At the same time, markets for our construction and forestry division slowed, dampening results as the division takes actions to manage inventory levels and adjusts to lower levels of demand.”
Earlier this month, Deere announced plans to lay off more than 100 workers at its Dubuque Works, effective in early April, due to sluggish market conditions. It marked the third round of layoffs in recent months at the northeast Iowa factory which makes construction and forestry equipment. Norwood is looking to the year ahead with optimism for the ag division.
“Our tractor order book for the Fiscal Year 2020 is healthy with a strong sold-ahead position,” he says, “indicating a positive reception to our newly redesigned ADAR, featuring an industry-first, fully-integrated, four-track option for a rigid-frame row crop tractor.” Deere employs about 74,000 people worldwide.