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Deere Reports 3% Profit;
Forecast 5% Rise in 2013 Equipment Sales

November 21, 2012 — Following its announcement this morning that its net sales rose 14% in the fourth quarter, Deere & Co. also reported that its fourth-quarter profit increased 3% to $687.6 million, or $1.75 per share, from $669.6 million, or $1.62 per share, in the year-ago period. Sales rose 14% to $9.79 billion.

Wall Street analysts expected the company to earn $1.88 a share on sales of $8.93 billion, according to a survey by FactSet, according to MarketWatch.  

Deere said demand for U.S. farm equipment kept pace with recent performance, while its construction business continued its recovery. Looking ahead, Deere said equipment sales are projected to increase by about 5% for 2013 and to rise by about 10% in the first quarter. Deere expects fiscal 2013 profit of about $3.2 billion, up from $3.07 billion in 2012. Analysts are looking for year-end income of $3.26 billion.

Company Outlook & Summary

Company equipment sales are projected to increase by about 5% for full year 2013 and to be up about 10% 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."

Market Conditions & Outlook

Agriculture & Turf. Deere's worldwide sales of agriculture and turf equipment are forecast to increase by about 4% for fiscal year 2013. Relatively high commodity prices and strong farm incomes are expected to continue supporting a favorable level of demand for farm machinery during the year. Deere's sales are expected to benefit from global expansion and lines of advanced new equipment. 

Industry sales for agricultural machinery in the U.S. and Canada are forecast to be about flat for 2013 in relation to the prior year's healthy levels. Caution around the U.S. livestock and dairy sectors is expected to offset continued strength in demand for large equipment such as high-horsepower tractors. 

Full-year industry sales in the EU27 are forecast to be flat to down 5% due to continuing deterioration in the overall economy and a poor harvest in the U.K. Sales in the Commonwealth of Independent States are expected to be modestly higher in 2013. 

In South America, industry sales are projected to be up about 10% as a result of favorable commodity prices and higher planting intentions. Industry sales in Asia are projected to be little-changed from 2012 due to softer economic conditions in India and China. 

U.S. and Canada industry sales of turf and utility equipment are expected to be up about 5% for 2013, reflecting some improvement in the U.S. economy. Deere's sales are expected to increase more than the industry due to the impact of new products.

Construction & Forestry. Deere's worldwide sales of construction and forestry equipment are forecast to increase by about 8% for fiscal 2013 due in part to modest improvement in U.S. economic conditions. Sales in world forestry markets are projected to be about flat for the year as further weakness in European markets offsets stronger demand in the U.S.

Financial Services. Fiscal-year 2013 net income attributable to Deere & Company for the financial services operations is expected to be approximately $500 million. The forecast improvement is primarily due to expected growth in the credit portfolio and lower crop insurance claims. These factors are projected to be partially offset by an increase in the provision for credit losses, which is anticipated to return to a more typical level.

John Deere Capital Corporation 

The following is disclosed on behalf of the company's financial services subsidiary, John Deere Capital Corporation (JDCC), in connection with the disclosure requirements applicable to its periodic issuance of debt securities in the public market. 

Net income attributable to John Deere Capital Corporation was $112.6 million for the fourth quarter and $382.7 million for full-year 2012, compared with $93.5 million and $363.6 million for the respective periods in 2011. The quarter's improvement was mainly due to growth in the credit portfolio, partially offset by an increased provision for credit losses and higher selling, administrative and general expenses. Full-year 2012 results were higher primarily due to growth in the credit portfolio and a lower provision for credit losses, partially offset by higher selling, administrative and general expenses and narrower financing spreads. 

Net receivables and leases financed by JDCC were $26.509 billion and $23.184 billion at October 31, 2012 and 2011, respectively.

Source: Deere & Co.

Posted November 21, 2012
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