RERMAG

Deere Second-Quarter Earnings Reach Record $1.056 Billion

Deere & Co. this week reported net income was $1.06 billion, or $2.61 per share, for the second quarter ended April 30, compared with $904.3 million, or $2.12 per share, for the same period last year.

For the first six months of the year, net income attributable to Deere & Co. was $1.59 billion, or $3.91 per share, compared with $1.42 billion, or $3.32 per share, last year.

Worldwide net sales and revenues increased 12 percent, to $10.01 billion, for the second quarter and rose 12 percent to $16.78 billion for six months. Net sales of the equipment operations were $9.41 billion for the quarter and $15.52 billion for six months, compared with $8.33 billion and $13.84 billion for the same periods last year.

"John Deere is well on its way to a year of outstanding performance after reporting an eighth consecutive quarter of record earnings," said Samuel Allen, chairman and CEO. "Our results are a reflection of positive conditions in the global farm economy, which is continuing to show impressive strength and endurance. Deere is gaining new customers throughout the world, who are responding with great enthusiasm to our innovative lines of equipment."

Net sales of the worldwide equipment operations increased 13 percent for the quarter and 12 percent for six months compared with the same periods a year ago. Equipment net sales in the United States and Canada increased 18 percent for the quarter and 13 percent year to date. Outside the U.S. and Canada, net sales increased 6 percent for the quarter and 12 percent for six months.

Deere's equipment operations reported operating profit of $1.52 billion for the quarter and $2.22 billion for six months, compared with $1.27 billion and $1.91 billion last year. The improvement for both periods was primarily due to the impact of price realization and higher shipment volumes. These factors were partially offset by higher production costs related to new products and engine-emission requirements, as well as increased raw-material costs and research and development expenses.

Company equipment sales are projected to increase by about 15 percent for fiscal 2012 and by about 25 percent for the third quarter compared with the same periods a year ago. Included is an unfavorable currency-translation impact of about 3 percent for the year and 4 percent for the third quarter. For the full year, net income attributable to Deere & Co. is anticipated to be about $3.35 billion.

Construction and forestry sales increased 26 percent for the second quarter and 24 percent for six months mainly due to higher shipment volumes and price realization. Operating profit was $119 million for the quarter and $243 million for six months, compared with $105 million and $194 million last year.

Deere's worldwide sales of construction and forestry equipment are forecast to increase by about 20 percent for 2012. The gain reflects further strength in the rental, energy, material-handling, industrial, and international sectors. The company said it is benefiting from growth in sales to independent rental companies, which are upgrading and replenishing their fleets. Further, Deere's sales are being supported by a range of advanced new products and by geographic expansion. After considerable growth in 2011, world forestry markets are projected to be about the same for 2012. Weakness in Europe is being offset by improvement in other international markets.

Financial services reported net income attributable to Deere & Co. of $109.2 million for the quarter and $228.3 million for six months compared with $105.1 million and $223.3 million last year. Results were higher for the quarter primarily due to growth in the credit portfolio, partially offset by increased selling, administrative and general expenses. Six-month results benefited from growth in the credit portfolio, revenue from wind energy credits and a lower provision for credit losses.

Full-year 2012 net income attributable to Deere & Co. for the financial services operations is expected to be approximately $465 million, slightly lower than the prior year. The forecast decline is primarily due to an anticipated increase in selling, administrative and general expenses and narrower financing spreads, largely offset by growth in the credit portfolio.

"Our extensive investments in new products and additional global capacity are moving ahead at an accelerated rate," Allen said, pointing out there are more than a dozen major projects under way throughout the world, including seven new factories. "These investments are essential to the success of our longer-term growth objectives, which we believe are firmly on track. They also put Deere in a sound position to respond to a rising global need for food, shelter, and infrastructure in the years ahead. In our view, these powerful trends have considerable staying power and should prove highly rewarding to our customers and investors."

Net income attributable to John Deere Capital Corp. was $78.3 million for the second quarter and $171.7 million year to date, compared with $85.9 million and $169.6 million for the respective periods last year. Net receivables and leases financed by JDCC were $24.56 billion at April 30, compared with $22.48 billion last year.

Deere & Co. is headquartered in Moline, Ill.

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