Profits and sales up for John Deere
By Becca Wilkins28 November 2008
US-based John Deere recorded fourth quarter sales of US$ 7 billion, up +21% on the previous year's results. The company also saw an increase of +18% to US$ 28 billion for the full year.
Net sales for the company's equipment operations, including construction and forestry, commercial and consumer and agricultural divisions, increased by +24% in the fourth quarter to US$ 7 billion, from US$ 5 billion last year and by +20% to US$ 26 billion for the full year, compared with the US$ 21 billion for same period last year.
Deere's equipment operations also recorded positive operating profits of US$ 549 million for the quarter and US$ 3 billion for the year, compared with US$ 511 million and US$ 2 billion respectively for the same periods in 2007.
A statement from the company said improvement for both periods were largely due to the "favourable impact" of higher shipment volumes and improved prices, partially offset by increased raw material costs and higher research and development expenses.
The fourth quarter results included pretax expenses of approximately US$ 50 million to close a facility in Canada, while higher selling, administrative and general expenses had an impact on the full year, the statement added.
John Deere chairman and CEO, Robert W Lane said, "In the face of highly uncertain global economic conditions, John Deere has completed a fifth consecutive year of record earnings, reflecting our efforts to build and grow a great business."
Deere's construction and forestry sector saw sales increase by +3% for the fourth quarter and decrease by -4% for the full year. Operating profit was US$ 89 million for the quarter and US$ 466 million for the year, against US$ 134 million and US$ 571 million a year ago.
The company's agricultural division saw sales increase by +43% for the quarter and +37% for the full year, with fourth quarter operating profits totalling US$ 476 million and US$ 2 billion for the full year, compared with the US$ 388 million and US$ 1 billion for the respective periods last year.
Meanwhile, in the commercial and consumer division, fourth quarter sales declined by -11%, but increased by +2% for the full year. The division had an operating loss of US$ 16 million for the quarter and an operating profit of US$ 237 million for the full year, compared with last year's operating loss of US$ 11 million for the quarter and operating profit of US$ 304 million for the year.
The company stated the quarter's operating loss was higher primarily due to expenses incurred closing the Canadian factory.
It added, "The outlook for the coming year is highly uncertain and its impact on John Deere's various businesses is unusually difficult to assess at this time."
However, the company expects worldwide sales of construction and forestry equipment to decline by approximately -12% for the full year 2009, while worldwide sales in the agricultural equipment sector are forecast to increase by about +5% for the year. Sales in the commercial and consumer sector are projected to be down -6% during the same period.