Deere & Co. reported net income of $722 million for the fiscal fourth quarter ended Nov. 3, 2019, compared to $785 million for the fiscal fourth quarter ended Oct. 28, 2018, an 8-percent, year-over-year decrease. Worldwide net sales and revenues increased 5 percent in both the fourth quarter and full year of 2019 to $9.896 billion and $39.258 billion, for the respective periods. Net sales of the equipment operations were $8.703 billion for the quarter compared with $8.343 billion a year ago, a 4.3-percent boost. For the full year, net sales of the equipment operation were $34.886 billion, compared with $33.351 billion for the full year of fiscal 2018, a 4.6-percent increase.
While overall sales increased so did concerns about international economic conditions and especially the trade wars from the Trump Administration.
"John Deere's performance reflected continued uncertainties in the agricultural sector," said John C. May, chief executive officer. "Lingering trade tensions coupled with a year of difficult growing and harvesting conditions have caused many farmers to become cautious about making major investments in new equipment. Additionally, financial services results have come under pressure due to operating-lease losses. At the same time, general economic conditions have remained favorable. This has supported demand for smaller equipment and led to solid results for Deere's construction and forestry business, which had a record year for sales and operating profit."
Net income attributable to Deere & Co. for fiscal 2020 is forecast to be in a range of $2.7 billion to $3.1 billion.
"Despite present challenges, the longer-term outlook for our businesses remains healthy and points to a promising future for Deere," May said. "We are particularly encouraged by the adoption of precision technologies and believe we are well-positioned to be a leader in the delivery of smarter, more efficient and sustainable solutions to our customers. At the same time, we are committed to the successful execution of our strategic plan and have initiated a series of measures to create a leaner organizational structure that can operate with more speed and agility. We're confident these steps will lead to improved efficiencies and help the company focus its resources and investments on areas that have the greatest impact on performance."
Agriculture & Turf sales increased for the quarter and full year of 2019 because of price realization and higher shipment volumes, partially offset by the unfavorable effects of currency translation. Operating profit decreased for the quarter and year. The quarter's decline was primarily because of higher production costs, higher selling, administrative, and general expenses, the unfavorable effects of currency exchange and increased research and development expenses.
Construction & Forestry sales were higher for the quarter and year primarily because of higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation. The inclusion of Wirtgen's sales for two additional months in 2019 accounted for about 4 percent of the year's net sales increase. Wirtgen's operating profit was $67 million for the quarter and $343 million for the full year, compared with $79 million and $116 million for the corresponding periods of 2018. Excluding Wirtgen, the decline in Construction & Forestry results for the quarter was primarily because of higher production costs, increased selling, administrative, and general expenses, and a less-favorable sales mix, partially offset by higher shipment volumes and price realization. Full-year 2019 results, excluding Wirtgen, moved higher as a result of price realization and higher shipment volumes, partially offset by higher production costs and a less-favorable sales mix.
Fourth quarter Construction & Forestry sales were $2.947 billion compared to $2.738 billion a year ago, a 7.6-percent jump. For the full year, Construction & Forestry sales were $11.220 billion compared to $10.160 billion a year ago, a 10.4-percent leap.
Deere's worldwide sales of agriculture and turf equipment are forecast to decline 5 to 10 percent for fiscal-year 2020, including a negative currency-translation effect of 1 percent. Industry sales of agricultural equipment in the U.S. and Canada are forecast to be down about 5 percent, driven by lower demand for large equipment. Full-year industry sales in the EU28 member nations are forecast to be approximately flat as are South American industry sales of tractors and combines. Asian sales are forecast to be about the same as the prior year. Industry sales of turf and utility equipment in the U.S. and Canada are expected to be about flat.
Deere's worldwide sales of construction and forestry equipment are anticipated to be down 10 to 15 percent for 2020, with foreign-currency rates having an unfavorable translation effect of 1 percent. The outlook reflects slowing construction activity as well as the company's efforts to manage dealer inventory levels. In forestry, global industry sales are expected to be in line with the previous year.
