Business

Farm, construction woes sink Deere results

Company reduces full year income, sales forecast

People look at Deere equipment as they attend National Farm Machinery show in Louisville, Kentucky, February 11, 2016. With U.S. farmers bracing for a third year of declining incomes, many have said they cannot afford upgrades.That means tough times for Deere & Co and rivals AGCO Corp, CNH Industrial NV and Claas KGaA mbH.  Picture taken February 11, 2016. REUTERS/Meredith Davis
People look at Deere equipment as they attend National Farm Machinery show in Louisville, Kentucky, February 11, 2016. With U.S. farmers bracing for a third year of declining incomes, many have said they cannot afford upgrades.That means tough times for Deere & Co and rivals AGCO Corp, CNH Industrial NV and Claas KGaA mbH. Picture taken February 11, 2016. REUTERS/Meredith Davis

A continuing slowdown in construction and agricultural equipment sales slashed first-quarter fiscal year 2017 results for Deere & Co. and also reduced its full year earnings and revenue forecast.

The Moline, Ill., conglomerate posted net income of $254.4 million, or 80 cents per share, for the three months that ended on Jan. 31, compared with $386.8 million, or $1.12 per share, for the same period of 2015.

Worldwide net sales and revenues for the first quarter decreased 13 percent to $5.5 billion from $6.4 billion last year. Net sales of the equipment operations were $4.769 billion for the quarter compared with $5.605 billion a year ago.

“John Deere’s first-quarter results reflected the continuing impact of the downturn in the global farm economy as well as weakness in construction equipment markets,” said Samuel Allen, Deere chairman and CEO, in a news release.

Sales of Deere equipment in the United States and Canada fell 18 percent. Outside the U.S. and Canada, sales were down 9 percent, with unfavorable currency-translation effects of 11 percent.

Deere’s equipment operations reported an operating profit of $214 million for the quarter, compared with $414 million in the same period last year.

The quarterly decline was primarily due to lower shipment volumes, the unfavorable effects of foreign currency exchange and the impact of a less favorable product mix.

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Deere said it expects equipment sales to be down 8 percent in its second quarter and 10 percent for all of fiscal year 2017. The company had earlier predicted sales for the fiscal year would be down 8 percent.

Although expecting “another challenging year,” Allen was upbeat about the company’s future.

“Our forecast represents a level of performance much better than we have experienced in previous downturns,” he said. “The company’s financial condition remains strong and we are well-positioned to continue investing in innovative products, advanced technology and new markets.

“These actions, we’re confident, will provide significant value to our customers and investors in the years ahead.”

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