Deere & Co. posted $8.925 billion in net sales and revenues in its fiscal third quarter, compared to $10.036 billion in the fiscal third quarter of 2019, an 11-percent decline, better than expected given the COVID-19 pandemic and uncertain economic conditions. Deere reported net income of $811 million for the third quarter ended Aug. 2, 2020, or $2.57 per share, compared with net income of $899 million, or $2.81 per share for the fiscal third quarter of 2019, a 9.8-percent decline.
Operating margins reached 14.6 percent, helped by strong execution in the face of the global pandemic.
"With outstanding support from our dedicated global workforce and dealer organization, John Deere delivered a strong performance in the third quarter in the face of a serious global pandemic and uncertain market conditions," said John May, chairman and CEO. "As we manage through the pandemic, Deere's number-one priority continues to be safeguarding the health and well-being of its employees. Thanks to aggressive measures taken early in the crisis, we have had success keeping our employees safe, our factories and parts centers functioning, and our customers served."
Net sales of the equipment operations were $7.859 billion for the quarter compared with $8.969 billion a year ago, a 12.4-percent decline. For the first nine months of the fiscal year, net sales of equipment operations were $22.612 billion compared to $26.182 billion last year, a 13.6-percent decline.
Deere & Co. is forecasting net income for the full year to be about $2.25 billion. However, many uncertainties remain regarding the effects of the global pandemic that could negatively affect the company's results and financial position in the future. In addition, the company has announced broad employee-separation programs that will be completed during the fourth quarter in support of its strategy to create a leaner, more agile organization. The programs' total pretax expense included in the forecast is about $175 million with estimated annual savings of $175 million.
"Although unsettled market conditions and related customer uncertainty are expected to have a moderating effect on key markets in the near term, we believe Deere is well-positioned to help make our customers more profitable and sustainable," May said. "In addition, we are encouraged by the early benefits we are experiencing from the company's recently launched smart-industrial operating model. We're confident it will help accelerate our ability to deliver differentiated solutions to our customers, while contributing to improved efficiencies across the company."
Deere's worldwide sales of agriculture and turf equipment are forecast to decline about 10 percent for fiscal year 2020, including a negative currency-translation effect of about 2 percent. Industry sales of agricultural equipment are expected to be down 5 to 10 percent from last year for the U.S. and Canada, while sales in Europe are also expected to be down 5 to 10 percent. South American industry sales of tractors and combines are projected to be down 10 to 15 percent. Asian sales are forecast to be down slightly. Industry sales of turf and utility equipment in the U.S. and Canada are expected to be down about 5 percent for 2020.
Deere's is expecting worldwide sales of construction and forestry equipment to be down about 25 percent for 2020, with foreign-currency rates having an unfavorable translation effect of about 1 percent. The outlook reflects market uncertainty as a result of COVID-19 as well as efforts to bring down field inventory levels. Industry construction-equipment sales in North America are expected to decline by about 20 percent for the year. In forestry, global industry sales are expected to be down 20 to 25 percent because of weaker demand in North America and Russia.
