Deere Profit Rises Despite Supply-Chain Challenges
Deere & Co.
DE -1.10%
posted higher sales and profit in its fiscal second quarter on strong demand for its farm and construction equipment, even as the company confronts supply-chain challenges and inflation weighs on American farmers.
Chief Executive
John May
said that supply-chain pressures disrupted production levels and deliveries during the quarter and that the company is working with suppliers and dealers to address those challenges. Still, it is seeing strong demand from customers. Both profit and sales rose at double-digit rates in the latest period.
“Looking ahead, we believe demand for farm equipment will continue benefiting from positive fundamentals in spite of availability concerns and inflationary pressures affecting our customers’ input costs,” Mr. May said in a statement.
The company raised its profit forecast to between $7 billion and $7.4 billion this fiscal year, an increase of $300 million on either end of the range. The company said that includes a $220-million gain from special items, including a noncash gain on the remeasurement of Deere’s investment in a joint venture with
Hitachi Construction Machinery Co.
Shares of Deere fell more than 4% to $348.73 in premarket trading.
Overall for the period ended May 1, Deere reported a profit of $2.10 billion, or $6.81 a share, compared with $1.79 billion, or $5.68 a share, a year earlier. Analysts surveyed by FactSet were looking for earnings of $6.75 a share.
Sales rose 11% to $13.37 billion. Analysts surveyed by FactSet were looking for $13.23 billion.
The company’s production and precision agriculture saw sales rise 13% as price increases outpaced higher production and research costs. Small agriculture and turf sales rose 5%, though operating profit fell due to higher costs and a less-favorable sales mix. Construction and forestry sales increased 9%.
Deere, like other companies, has seen its labor and other costs rise over the past year, but surging prices for wheat and other crops have boosted demand for Deere’s agricultural equipment. The company has so far been able to pass much of its higher costs onto customers.
The U.S. Agriculture Department in February estimated that net farm income rose 25% last year, but is expected to fall 4.5% this year to $113.7 billion, still higher than the two-decade average. Farmers typically spend extra income on equipment, because they can deduct those purchases from their federal income taxes as business investments.
Write to Will Feuer at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Deere & Co.
DE -1.10%
posted higher sales and profit in its fiscal second quarter on strong demand for its farm and construction equipment, even as the company confronts supply-chain challenges and inflation weighs on American farmers.
Chief Executive
John May
said that supply-chain pressures disrupted production levels and deliveries during the quarter and that the company is working with suppliers and dealers to address those challenges. Still, it is seeing strong demand from customers. Both profit and sales rose at double-digit rates in the latest period.
“Looking ahead, we believe demand for farm equipment will continue benefiting from positive fundamentals in spite of availability concerns and inflationary pressures affecting our customers’ input costs,” Mr. May said in a statement.
The company raised its profit forecast to between $7 billion and $7.4 billion this fiscal year, an increase of $300 million on either end of the range. The company said that includes a $220-million gain from special items, including a noncash gain on the remeasurement of Deere’s investment in a joint venture with
Hitachi Construction Machinery Co.
Shares of Deere fell more than 4% to $348.73 in premarket trading.
Overall for the period ended May 1, Deere reported a profit of $2.10 billion, or $6.81 a share, compared with $1.79 billion, or $5.68 a share, a year earlier. Analysts surveyed by FactSet were looking for earnings of $6.75 a share.
Sales rose 11% to $13.37 billion. Analysts surveyed by FactSet were looking for $13.23 billion.
The company’s production and precision agriculture saw sales rise 13% as price increases outpaced higher production and research costs. Small agriculture and turf sales rose 5%, though operating profit fell due to higher costs and a less-favorable sales mix. Construction and forestry sales increased 9%.
Deere, like other companies, has seen its labor and other costs rise over the past year, but surging prices for wheat and other crops have boosted demand for Deere’s agricultural equipment. The company has so far been able to pass much of its higher costs onto customers.
The U.S. Agriculture Department in February estimated that net farm income rose 25% last year, but is expected to fall 4.5% this year to $113.7 billion, still higher than the two-decade average. Farmers typically spend extra income on equipment, because they can deduct those purchases from their federal income taxes as business investments.
Write to Will Feuer at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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