Income, Revenues Continue Downward Trend in Deere’s Second Quarter
Deere & Company posted net income of $495.4 million in its fiscal second quarter ended April 30, a 28.3-percent decline compared to $690.5 million in the same period last year. For the first six months of the fiscal year, net income dropped 30.3 percent from $1.077 billion a year ago to $749.8 million this year.
Worldwide net sales and revenue dropped 4 percent to $7.875 billion for the second quarter and decreased 8 percent to $13.4 billion for the six-month period.
Net sales of the equipment operations were $7.107 billion for the quarter and $11.876 billion for the first six months, compared to $7.399 billion and $13.004 billion for the previous year.
“John Deere’s second quarter performance reflected the continuing impact of the downturn in the global farm economy and further weakness in the construction equipment sector,” said Samuel Allen, chairman and CEO. “In the face of challenging market conditions, Deere’s businesses benefited from the sound execution of operating plans, the strength of a broad product portfolio and our success creating a more flexible cost structure.”
Deere’s Construction and Forestry division, sales plunged 16 percent for the second quarter and 20 percent for six months mainly as a result of lower shipment volumes and higher sales-incentive costs.
Deere officials aren’t expecting much improvement in the near future.
The company now expects equipment sales to decrease about 9 percent for fiscal 2016 and to drop about 12 percent in the third quarter compared to fiscal Q315. For fiscal 2016, net income is expected to be about $1.2 billion.
“Although our forecast calls for lower results this year in light of ongoing market pressures, Deere is continuing to perform at a much higher level than in previous downturns,” Allen added. “Deere’s financial condition remains strong and we believe the company is well-positioned to capitalize on attractive growth opportunities that will deliver value to our customers and investors in the future.”
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.