RERMAG

Deere Second-Quarter Earnings Rise 39 Percent

Deere & Co. last week announced net income attributable to Deere & Co. was $904.3 million, or $2.12 per share, for its fiscal second quarter ended April 30, a 39-percent increase compared with $547.5 million, or $1.28 per share, for the same period last year.

Second-quarter 2010 earnings were $677.0 million, or $1.58 per share, excluding a tax charge of $129.5 million, or $0.30 per share, related to the enactment of U.S. health-care legislation.

For the first six months of the year, net income attributable to Deere & Co. was $1.42 billion, or $3.32 per share, compared with $790.7 million, or $1.85 per share, last year. Six-month 2010 results also were affected by the tax charge.

Worldwide net sales and revenues increased 25 percent, to $8.91 billion, for the second quarter and were up 26 percent to $15.03 billion for six months. Net sales of the equipment operations were $8.33 billion for the quarter and $13.84 billion for six months, compared with $6.55 billion and $10.79 billion for the corresponding periods last year.

"With our record second-quarter performance, John Deere is well on its way to a year of exceptional results," said Samuel Allen, chairman and CEO. "Deere's actions to expand its global competitive position are attracting new customers worldwide and making a major contribution to our results."

Construction and forestry sales climbed 46 percent for the quarter and 61 percent for six months mainly due to higher shipment volumes and improved price realization. The division had operating profit of $105 million for the quarter and $194 million for six months, compared with last year's operating profit of $36 million in the quarter and an operating loss of $1 million for the six-month period.

"Markets for construction equipment in the U.S. and for farm machinery in Europe are in the early stages of recovery," Allen said. "We're optimistic about the longer-term opportunity for further improvement in these and other key areas."

Deere's worldwide sales of construction and forestry equipment are forecast to rise by about 35 percent for 2011. The increase reflects somewhat-improved market conditions in relation to the prior year's low level and increased activity outside of the U.S. and Canada. Construction equipment sales to independent rental companies are seeing growth, while world forestry markets are experiencing further improvement as a result of strong wood and pulp prices.

Deere's equipment operations reported operating profit of $1.27 billion for the quarter and $1.91 billion for six months, compared with $988 million and $1.30 billion last year. Results were better in both periods primarily due to the impact of higher shipment and production volumes and improved price realization, partially offset by increased raw-material costs and higher selling, administrative and general expenses.

Net income of the company's equipment operations was $797 million for the quarter and $1.19 billion for six months, compared with $454 million and $623 million for the respective periods last year.

Financial services reported net income attributable to Deere & Co. of $105.1 million for the quarter and $223.3 million for six months compared with $86.9 million and $172.0 million last year. Results were higher for both periods primarily due to growth in the portfolio and a lower provision for credit losses.

Net income attributable to John Deere Capital Corp. was $85.9 million for the second quarter and $169.6 million year to date, compared with $69.4 million and $133.4 million for the respective periods last year. Results were higher for both periods primarily due to growth in the portfolio and a lower provision for credit losses.

Net receivables and leases financed by JDCC were $22.48 billion at April 30, 2011, compared with $19.82 billion last year.

Company equipment sales are projected to be up 21 to 23 percent for fiscal 2011 and up about 20 percent for the third quarter compared with the same periods a year ago. For the full year, net income attributable to Deere & Co. is anticipated to be about $2.65 billion.

The annual forecast includes a negative impact of approximately $300 million in sales and $70 million in operating profit resulting from the recent Japanese earthquake and tsunami.

According to Allen, the company's record of strong financial performance is helping support aggressive levels of organic growth. "Our consistent investment in new products and expanded global capacity puts the company on a solid footing for the future," he said. "As a result, John Deere is well-positioned to address the world's growing need for agricultural commodities, shelter and infrastructure. We believe these developments will have a positive impact on demand for productive farm and construction equipment in the years ahead and hold exciting promise for the company well into the future."

Deere & Co. is headquartered in Moline, Ill.

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