John Deere bullish on construction equipment growth
24 November 2010
After reporting a +75% increase in construction and forestry sales in the quarter ended 31 October, John Deere is forecasting revenues in the division to grow by up to +30% in total next year.
In a bullish update to the market, the US-headquartered company revealed a reversal of last year's fourth quarter net loss of US$ 222.8 million, reporting company-wide net income of US$ 457.2 million for the three months ended 31 October.
Worldwide, net sales and revenues for the fourth quarter increased +35%, to US$ 7.2 billion, and were up +13% to US$ 26 billion for the full year.
This growth was boosted by a reported +75% fourth quarter increase in construction and forestry sales, which John Deere said were also up +41% for the full year.
The construction and forestry division reported US$ 54 million quarterly operating profit, while the full-year figure stood at US$ 119 million. The figures contrast with just US$ 2 million net operating income in the fourth quarter of 2009, while last year's 12-month figure came in at an operating loss of US$ 83 million.
John Deere said the improvement in its construction and forestry equipment unit was mainly as a result of higher shipment and production volumes.
Meanwhile, net worldwide sales of equipment - including revenues from John Deere's agriculture and turf division - increased +39% and +14% in the fourth quarter and full-year respectively, producing quarterly net income of US$ 357 million and a full-year net result of US$ 1.5 billion.
Looking ahead, John Deere said 2011 would be "a year of record new-model introductions for the company", due in large part to the implementation of more rigorous global emissions standards.
Overall company equipment sales are projected to be up as much as +12% for 2011 fiscal year, with the construction and forestry equipment division projected to see sales rise by +25% to +30%.
"The increase in construction and forestry reflects market conditions that are somewhat improved in relation to the relatively low level of the prior year. In addition, sales to independent rental companies are expected to see further growth," John Deere said.