Deere Rides Strong Farm Demand -- WSJ
August 18 2018 - 3:02AM
Dow Jones News
By Austen Hufford and Bob Tita
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 18, 2018).
Deere & Co. said Friday that farmers are continuing to buy
equipment even as they worry about potential tariffs on their
products.
In recent months, other countries have imposed or threatened to
impose retaliatory tariffs on U.S. farm goods following actions by
the Trump administration.
U.S. farmers have been awaiting details of a $12 billion aid
proposal that the administration says would support prices of
commodities caught up in trade disputes.
"Trade issues have weighed on farmer sentiment more recently,"
John May, Deere's head of agricultural solutions, said on a call
with analysts Friday to discuss the equipment maker's quarterly
results. "With sentiment likely to remain fluid over the coming
months, farmers continue to show a strong willingness to invest in
technology that improves both productivity and economic
outcomes."
Deere reported that its cost of goods sold in its just-ended
fiscal third quarter ticked up to 77% of net sales from 75% in the
prior quarter.
Steel and aluminum prices have been pushed up by U.S. tariffs on
imported metal, and Deere said it is raising prices to offset
higher raw-material costs. The Moline, Ill., company is just the
latest manufacturer to disclose higher expenses, raising concerns
that rising costs might blunt profit gains from a strong global
economy.
Deere shares rose 2% on Friday afternoon as the company said it
benefited from farmers replacing their equipment as well as from
increased investment in oil and gas and more home building.
The company affirmed its financial outlook for the year ending
Oct. 31, including a 30% rise in its sales of farm and construction
equipment to $33.7 billion. It expects adjusted net income of $3.1
billion.
The company raised its growth forecast for farm-equipment sales
to 15% this year, citing more favorable dairy and livestock
sectors.
The company expects construction-equipment sales to jump 81% in
the current fiscal year, with a big boost coming from its purchase
in December of German road-paving equipment company Wirtgen Group
for EUR4.48 billion ($5.33 billion). It also cited increased home
building in the U.S., more oil-and-gas activity and more spending
on transportation infrastructure.
In all for the quarter ended July 29, Deere reported net income
of $910.3 million, or $2.78 a share, up from $641.8 million, or
$1.97 a share, a year earlier. On an adjusted basis, excluding
certain items, the company earned $2.59 a share; analysts polled by
Thomson Reuters were expecting $2.75 a share.
Equipment sales rose 36% from a year earlier to $9.29 billion,
topping analysts expectations for $9.21 billion.
Total revenue, including in Deere's financing unit, rose 32% to
$10.31 billion, boosted by the addition of Wirtgen.
Write to Austen Hufford at austen.hufford@wsj.com and Bob Tita
at robert.tita@wsj.com
Corrections & Amplifications The company's quarter ended on
July 29. An earlier version of this article incorrectly stated the
quarter ended later in the month. (Aug. 17, 2018)
(END) Dow Jones Newswires
August 18, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Deere (NYSE:DE)
Historical Stock Chart
From Apr 2024 to May 2024
Deere (NYSE:DE)
Historical Stock Chart
From May 2023 to May 2024