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Deere and Co.’s financial outlook for next year signals supply chain delays and higher labor costs following a month-long strike won’t significantly dent profits at the world’s largest farm equipment maker.
Deere expects record net income for fiscal 2022 of between $6.5 billion and $7 billion, compared to the average estimate of $6.66 billion by 17 analysts, the Moline, Ill.-based company said Wednesday in a statement.
The tractor maker posted fourth-quarter profit that topped analysts’ estimates, though revenue for the period fell short of expectations for the first time in more than two years.
Net income for fiscal 2021 reached $5.96 billion, its highest ever.
Record earnings were part of the reason employees went on strike, arguing that they risked their lives as “essential” workers during the pandemic, and that they had worked with the company to take pay cuts in prior contracts when times were leaner for Deere’s profits.
Ongoing supply chain disruptions, rising raw material costs, about a $3.5 billion rise in labor costs on the new deal and a slowdown at factories due to the strike remain some hurdles Deere must navigate in the months ahead.
The company likely will have to raise prices on its equipment by about 1.5 percent to fully offset the increase in labor costs, according to analysts at JPMorgan.