Deere reports record fourth-quarter earnings of $688 million
Net income attributable to Deere & Company was $687.6 million, or $1.75 per share, for the fourth quarter ended Oct. 31, 2012, compared with $669.6 million, or $1.62 per share, for the same period last year.
For fiscal 2012, net income attributable to Deere & Company was $3.065 billion, or $7.63 per share, compared with $2.800 billion, or $6.63 per share, in 2011.
Worldwide net sales and revenues rose 14 percent, to $9.792 billion, for the fourth quarter and increased 13 percent to $36.157 billion for the full year. Net sales of the equipment operations were $9.047 billion for the quarter and $33.501 billion for the year, compared with $7.903 billion and $29.466 billion for the same periods in 2011.
“In the face of continuing global economic pressure, John Deere has completed another record year,” said Samuel R. Allen, chairman and chief executive officer of Deere & Company. “Our success reflects positive customer response to our lines of innovative equipment coupled with extensive efforts to expand our global competitive position.”
During the year, Deere continued with the record introduction of new products, while opening or moving ahead with new factories in China, India and Brazil. In the United States, the company announced capacity expansions for tractors, sprayers and cylinders. “John Deere’s performance illustrates the continuing impact of our operating model, which stresses a disciplined approach to cost and asset management,” Allen said. “As a result, we are achieving strong financial results and generating high levels of cash flow. These dollars are funding growth activities throughout the world and providing value directly to investors.”
Summary of operations
Net sales of the worldwide equipment operations increased 14 percent for the fourth quarter and full year compared with the same periods in 2011. Sales included price realization of 4 percent and an unfavorable currency-translation effect of 3 percent for both periods. Equipment net sales in the United States and Canada increased 26 percent for the quarter and 20 percent for the year. Outside the United States and Canada, net sales decreased 2 percent for the quarter and increased 5 percent for the year, with unfavorable currency-translation effects of 7 percent and 6 percent for these periods.
Deere’s equipment operations reported operating profit of $1.051 billion for the quarter and $4.397 billion for the full year, compared with $955 million and $3.839 billion for the same periods in 2011. The improvement in the quarter was primarily due to the impact of higher shipment volumes and price realization. These factors were partially offset by higher production costs and increased selling, administrative and general, and research and development expenses. Also affecting results was a goodwill impairment charge related to the company’s John Deere Water reporting unit and unfavorable effects of foreign currency exchange.
Full-year results improved primarily due to the impact of price realization and higher shipment volumes. Partially offsetting these factors were higher production and raw-material costs; unfavorable effects of foreign currency exchange; and increased research and development, and selling, administrative and general expenses. The increase in production costs for both periods was primarily related to new products, engine-emission requirements and incentive compensation expenses.
Net income of the company’s equipment operations was $576 million for the fourth quarter and $2.616 billion for the full year, compared with $552 million and $2.329 billion in 2011. The same aforementioned operating factors, along with a higher effective tax rate and increased interest expense, affected both quarterly and annual results.
Financial services reported net income attributable to Deere & Company of $121.7 million for the quarter and $460.3 million for the year compared with $122.1 million and $471.0 million in 2011. Results were slightly lower for the quarter primarily due to higher reserves for crop insurance claims, increased selling, administrative and general expenses, a higher provision for credit losses and narrower financing spreads. These factors were almost entirely offset by growth in the credit portfolio. Fiscal-year 2012 results were lower primarily due to increased selling, administrative and general expenses, higher reserves for crop insurance claims and narrower financing spreads, partially offset by growth in the credit portfolio and a lower provision for credit losses.
Company outlook & summary
Company equipment sales are projected to increase by about 5 percent for full year 2013 and to be up about 10 percent for the first quarter compared with the same periods of 2012. For fiscal 2013, net income attributable to Deere & Company is anticipated to be about $3.2 billion.
“Deere remains well-positioned to carry out its growth plans and capitalize on positive long-term trends, even though present global economic and fiscal concerns warrant continued caution,” Allen said. “With support from a highly committed group of employees, dealers and suppliers, our plans for helping meet the world’s growing need for food and infrastructure are moving ahead and achieving a good deal of success.
“We are proud of the company’s performance in 2012 and look forward to building on these gains in 2013 and beyond. Despite fragile economic conditions in many regions, we have great confidence in the company’s prospects and in our ability to deliver value to investors and other stakeholders in the future.”
For more information, visit www.deere.com.
