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.”