Deere & Co. reported net sales and revenue of $7.984 billion for the first quarter of fiscal 2019, compared to $6.913 billion in the first quarter of fiscal 2018, a 15.4-percent increase. The equipment operations division posted $6.941 billion compared to $5.974 billion a year ago, a 16.2-percent hike.
The Construction & Forestry segment reported the largest increase primarily because of the inclusion of Wirtgen for the full period, versus one month in the first quarter of fiscal 2018. Net sales were $2.260 billion compared to $1.731 billion a year ago, a 30.6-percent increase. Construction & Forestry net sales increased because of price realization and higher shipment volumes, partially offset by unfavorable currency translation. Wirtgen’s operating profit was $14 million for the quarter, compared with an operating loss of $92 million last year. Excluding Wirtgen, the improvement in Construction & Forestry results for the quarter was primarily driven by price realization, partially offset by higher production costs and a less favorable product mix.
“Although Deere has continued to make solid progress on a number of fronts and reported higher earnings for the quarter, our results were hurt by higher costs for raw materials and logistics as well by customer concerns over tariffs and trade policies,” said Samuel Allen, chairman and CEO. “These latter issues have weighed on market sentiment and caused farmers to become more cautious about making major purchases. At the same time, sales of John Deere construction and forestry machinery have continued at a strong pace. We believe cost pressures should abate as the year progresses and are hopeful we will soon have more clarity around trade issues. As a result, we remain cautiously optimistic about our prospects for the year ahead.”
The company projects equipment sales to increase by about 7 percent for fiscal 2019 compared to fiscal 2018. Included in the forecast are Wirtgen’s results for the full fiscal year of 2019 compared to 10 months of the previous year, adding about 1 percent to the company’s net sales forecast for the current year. Also included is a negative foreign currency transition of about 2 percent for the year. Net sales and revenues are projected to increase by about 7 percent for fiscal 2019. The company expects net income of about $3.6 billion.
“Despite unsettled conditions in some of our key markets, Deere expects to achieve strong financial results in 2018,” added Allen. “This is a testament to the success of our actions to create a more flexible cost structure, expand our global customer base, and develop leadership in the latest precision technologies. Customers are responding with great enthusiasm to the advanced features and technology in our new products.”