- First-quarter net income more than doubles on 23% gain in net sales, reflecting successful execution of new operating strategy.
- Improved conditions in agricultural and construction sectors setting stage for year of strong performance.
- Full-year earnings forecast increased to $4.6-5 billion.
Deere & Company reported net income of $1.224 billion for the first quarter ended Jan. 31, 2021, or $3.87 per share, compared with net income of $517 million, or $1.63 per share, for the quarter ended Feb. 2, 2020. Worldwide net sales and revenues increased 19% in the first quarter of 2021 to $9.112 billion. Equipment operations net sales were $8.051 billion for the quarter, compared with $6.53 billion in 2020.
“John Deere started 2021 on a strongly positive note,” said John C. May, chairman and chief executive officer. “Our results were aided by outstanding performance across our business lineup and improving conditions in the farm and construction sectors. In addition, our smart industrial operating strategy is making a significant impact on the company’s results while it also helps our customers be more profitable and sustainable.”
Company Outlook & Summary
Net income attributable to Deere & Company for fiscal 2021 is forecast to be in a range of $4.6-5 billion.
“We are proud of our success executing the strategy and creating a more focused organization that can operate with greater speed and agility,” May said. “As our recent performance shows, these steps are leading to improved efficiencies and helping the company target its resources and investments on areas that have the greatest impact. At the same time, even as we ramp up factory production and intensify our efforts to serve customers, we are mindful of the continuing challenges associated with the global pandemic. We remain committed, above all else, to safeguarding the health and well-being of our employees.”
In the first quarter of 2021, the company recorded impairments totaling $50 million pretax to certain long-lived assets. These impairments were offset by a favorable indirect tax ruling in Brazil of $58 million pretax. In the first quarter of 2020, total voluntary employee-separation program expense recognized was $127 million pretax
Beginning in fiscal year 2021, the company implemented a new strategy, operating model and reporting structure. With this change, the company’s agriculture and turf operations were divided into two new segments, which are described as follows:
- The production and precision agriculture segment is responsible for defining, developing and delivering global equipment and technology solutions to unlock customer value for production-scale growers of large grains, small grains, cotton and sugar. Main products include large and certain mid-size tractors, combines, cotton pickers, sugarcane harvesters and loaders and soil preparation, seeding, application and crop care equipment.
- The small agriculture and turf segment is responsible for defining, developing and delivering market-driven products to support mid-size and small growers and producers globally as well as turf customers. The operations are principally organized to support production systems for dairy and livestock, high-value crops and turf and utility operators. Primary products include certain mid-size and small tractors, as well as hay and forage equipment, riding and commercial lawn equipment, golf course equipment and utility vehicles.
There were no reporting changes for the construction and forestry and financial services segments. As a result, the company has four reportable segments.
Production and precision ag sales for the quarter increased due to higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation. Operating profit rose primarily due to price realization, higher shipment volumes/sales mix, and a favorable indirect tax ruling in Brazil. These items were partially offset by unfavorable effects of foreign-currency exchange. The prior period was affected by voluntary employee-separation expenses.
Small ag and turf sales for the quarter increased due to higher shipment volumes, price realization, and the favorable effects of currency translation. Operating profit increased primarily due to higher shipment volumes / sales mix and price realization. Results for the prior period were affected by voluntary employee-separation expenses.
Deere additionally released the following outlooks: