Deere announces third-quarter record earnings of $997 million
Net income attributable to Deere & Company was $996.5 million, or $2.56 per share, for the third quarter ended July 31, 2013, compared with $788.0 million, or $1.98 per share, for the same period last year.
For the first nine months of the year, net income attributable to Deere & Company was $2.730 billion, or $6.97 per share, compared with $2.377 billion, or $5.88 per share, last year.
Worldwide net sales and revenues increased 4 percent, to $10.010 billion, for the third quarter and rose 8 percent to $28.345 billion for nine months. Net sales of the equipment operations were $9.316 billion for the quarter and $26.373 billion for nine months, compared with $8.930 billion and $24.454 billion for the same periods last year.
“John Deere is well on the road to another year of impressive performance after reporting record third-quarter results,” said Samuel R. Allen, chairman and chief executive officer, Deere & Company. Sales and income for the period were higher than in any prior third quarter, he pointed out. “Deere’s success is a reflection of considerable strength in the farm sector, especially in North and South America,” Allen added. “We also are making further progress executing our wide-ranging operating and marketing plans, which call for expanding our global market presence while keeping a close watch on costs and assets.”
Summary of operations
Net sales of the worldwide equipment operations increased 4 percent for the quarter and 8 percent for nine months compared with the same periods a year ago. Sales included price realization of 3 percent and an unfavorable currency-translation effect of 1 percent for both the quarter and nine months. Equipment net sales in the United States and Canada rose 4 percent for the quarter and 9 percent year to date. Outside the U.S. and Canada, net sales increased 5 percent for the quarter and 6 percent for nine months, with unfavorable currency-translation effects of 1 percent and 3 percent for these periods.
Deere’s equipment operations reported operating profit of $1.443 billion for the quarter and $3.943 billion for nine months, compared with $1.127 billion and $3.347 billion last year. The improvement for both periods was due primarily to the impact of price realization and higher shipment volumes. Also affecting third-quarter results was an impairment charge for long-lived assets related to John Deere Water operations. In addition, nine-month results were impacted by increases in production costs, selling, administrative and general expenses and warranty costs, as well as the unfavorable effects of foreign exchange. Increased production costs were related primarily to higher manufacturing-overhead expenses, partially offset by lower raw-material costs. The higher manufacturing-overhead expenses were in support of growth, new products and engine-emission requirements.
Net income of the company’s equipment operations was $846 million for the third quarter and $2.324 billion for the first nine months, compared with $678 million and $2.040 billion in 2012. The operating factors mentioned above, along with a higher effective tax rate and increased interest expense, affected both quarterly and year-to-date results.
Financial services reported net income attributable to Deere & Company of $150.0 million for the quarter and $407.9 million for nine months compared with $110.4 million and $338.6 million last year. Results for both periods were aided by growth in the credit portfolio and improved crop insurance margins. These factors were partially offset by an increased provision for credit losses in the quarter and by higher selling, administrative and general expenses for the year to date. Last year’s nine-month results also benefited from revenue related to wind energy credits.
Company outlook & summary
Company equipment sales are projected to be up about 5 percent for fiscal 2013 and to decrease by about 5 percent for the fourth quarter compared with the year-ago periods. Included is an unfavorable currency-translation impact of about 1 percent for the year. For the full year, net income attributable to Deere & Company is anticipated to be about $3.45 billion.
According to Allen, Deere is poised for a very successful 2013. “Last year’s fourth-quarter sales were particularly strong, in part because our factories were running at a high rate to catch up with customer orders,” he said. “Even with this difficult comparison, our financial guidance implies a healthy level of income for the coming quarter and a third consecutive year of record results.”
Longer term, Allen said he remains quite optimistic about the company’s prospects. “We continue to believe our investment in new products and capacity will allow Deere to be the provider of choice for a growing global customer base in the years ahead,” he said. “In our view, broad trends based on a growing, more affluent, and increasingly mobile population have ample staying power and should help the company deliver substantial value to its customers, investors and other stakeholders in the future.”
For more information, visit www.deere.com.
