Net income attributable to Deere & Company was $513.7 million, or $1.20 per share, for the first quarter ended January 31, compared with $243.2 million, or $0.57 per share, for the same period last year.
Worldwide net sales and revenues for the first quarter increased 27 percent, to $6.119 billion, compared with $4.835 billion last year.
Net sales of the equipment operations were $5.514 billion for the quarter compared with $4.237 billion a year ago.
“John Deere’s first-quarter results reflect improving demand for our innovative lines of equipment coupled with the skillful execution of our business plans,” said Samuel R. Allen, chairman and chief executive officer. “Our actions are helping attract customers through advanced new products and technologies.”
Sales of large farm machinery, particularly in the U.S. and Canada, are continuing to make a major impact, while construction equipment shipments are experiencing some degree of recovery, Allen noted.
“Our record first-quarter performance is especially gratifying in light of market conditions that remain below normal levels in certain key sectors.”
Summary of Operations
Net sales of the worldwide equipment operations rose 30 percent for the quarter. Sales included a price increases of 2 percent.
Equipment net sales in the United States and Canada increased 35 percent for the quarter. Outside the U.S. and Canada, net sales were up 22 percent for the quarter, with an unfavorable currency-translation effect of 1 percent.
Deere’s equipment operations reported operating profit of $646 million for the quarter, compared with $315 million last year. Benefiting the quarter were higher shipment and production volumes as well as improved price realization, partially offset by increases in raw material costs and higher incentive-compensation expenses.
Financial services reported net income attributable to Deere & Company of $118.2 million for the quarter compared with $85.1 million last year. Results increased for the quarter primarily due to portfolio growth and a lower provision for credit losses.
Company Outlook & Summary
Company equipment sales now are projected to be up 18 to 20 percent for fiscal 2011 and up about 25 percent for the second quarter compared with the same periods of the previous year.
Included is a favorable currency- translation impact of about 2 percent for the year and the quarter. Net income attributable to Deere & Company is anticipated to be approximately $2.5 billion for the full year.
Equipment Division Performance
Agriculture & Turf. Sales increased 21 percent for the quarter largely due to higher shipment volumes and improved price realization. Operating profit was $558 million compared with $352 million for the quarter last year.
The improvement was primarily due to higher shipment and production volumes as well as improved price realization, partially offset by increased raw-material costs and higher incentive-compensation expenses.
Construction & Forestry. Construction and forestry sales climbed 81 percent, resulting in operating profit of $88 million. Last year the division had an operating loss of $37 million for the quarter. Contributing to the increase were significantly higher shipment and production volumes as well as improved price realization, partially offset by increased raw-material costs and higher incentive-compensation expenses.
Market Conditions & Outlook
Agriculture & Turf. Worldwide sales of agriculture and turf equipment are forecast to increase by about 16 percent for full-year 2011, benefiting from favorable global farm conditions.
Farmers in many of the company’s markets are experiencing solid levels of income due to strong global demand for agricultural commodities, low grain stocks in relation to use, and rising prices for crops such as corn, wheat, soybeans, sugar and cotton. Farm commodity prices have escalated sharply since the beginning of the year, lending further support to the outlook.
After staging a healthy advance in 2010, industry farm-machinery sales in the U.S. and Canada are forecast to be up about 5 percent for 2011. Overall conditions remain positive and demand for high-horsepower equipment continues to be strong.
However, production limits and transitional issues associated with the broad launch of Interim Tier 4 emissions-compliant equipment are expected to have a moderating effect on near-term sales potential.
Industry sales in the EU 27 nations of Western and Central Europe are forecast to increase by about 10 percent, while sales in the Commonwealth of Independent States are expected to see moderate gains in relation to the prior year’s depressed level. Farm conditions are strengthening in the European and CIS markets. Industry sales in Asia also are forecast to grow moderately after last year’s robust improvement.
In South America, industry sales for the year are projected to be comparable with the strong levels of 2010. Deere’s own sales in the region are expected to benefit from a broader lineup of recently introduced products.
Industry sales of turf and utility equipment in the U.S. and Canada are expected to be flat after experiencing modest recovery in 2010.
Construction & Forestry. Deere’s worldwide sales of construction and forestry equipment are forecast to rise by about 35 percent for 2011.
The increase reflects market conditions that are somewhat improved in relation to the prior year’s low level. In addition, construction equipment sales to independent rental companies are expected to see further growth. World forestry markets are expected to experience further improvement for the year as a result of strong wood and pulp prices.