Deere & Co. officials Friday said they’re seeing continued demand for agriculture equipment, even as the industry faces an escalating tariff war. The company provided an optimistic look at the farm economy’s future during its third quarter earnings report.
Deere, based in Moline, reported net income of $910.3 million, or $2.78 per share, for the third quarter which ended July 29. That’s up from $641.8 million, or $1.97 per share, for the same period last year.
For the first nine months of the year, Deere’s net income was $1.58 billion, or $4.82 per share — a drop from $1.65 billion, or $5.11 per share, for the same period last year.
“Deere’s third-quarter performance benefited from favorable market conditions and positive response to our advanced product lineup,” Chairman and CEO Samuel Allen said in the report. “Farm machinery sales in North America and Europe made solid gains, while construction equipment sales moved sharply higher.”
Allen said Deere continues to “face cost pressures for raw materials and freight, which are being addressed through a combination of cost management and pricing actions.”
Another challenge is trade issues “weigh(ing) on farmer sentiment,” according to President of Agricultural Solutions John May during the Friday call with analysts. But, he said new technology and a need for machinery replacements have kept sales strong. He expects the same next year.
“Replacement demand for large agricultural equipment is driving sales even in the face of tensions over global trade and other geopolitical issues,” Allen said in the report. “At the same time, we are heartened by our customers’ enthusiastic response to the advanced features and technology found on our new products.”
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Total revenue increased 32 percent in the quarter, to $10.3 billion, and rose 29 percent for the year so far. Net sales of the equipment operations were $9.29 billion for the quarter, compared to $6.83 billion for the same period last year.
Net sales of worldwide equipment operations increased 36 percent for the quarter. According to the report, Deere’s December acquisition of the Wirtgen Group added 17 percent to net sales for the quarter.
Agriculture and turf sales rose 18 percent for the quarter, due to higher shipment volumes and lower warranty expenses, May said. Construction and forestry sales increased 100 percent for the quarter, with Wirtgen adding 77 percent of the growth.