- Agriculture & Turf. Sales were up 18 percent for the quarter and 21 percent for the year primarily due to higher shipment volumes. Improved price realization and favorable currency translation affected sales for both periods.
Operating profit was $868 million for the quarter and $3.447 billion for the year, compared with $662 million and $2.790 billion in 2010. Results were better for both periods largely due to higher shipment volumes and improved price realization. These factors were partially offset by increased raw-material costs, higher manufacturing-overhead costs related to new products, and higher research and development expenses. Additionally, full-year results were negatively affected by increased selling, administrative and general expenses.
- Construction & Forestry. Construction and forestry sales rose 34 percent for the quarter and were up 45 percent for the year mainly due to higher shipment volumes. The division had operating profit of $87 million for the quarter and $392 million for the year, compared with $54 million and $119 million last year. Operating profit for both periods moved up primarily due to higher shipment and production volumes and improved price realization. These factors were partially offset by increases in raw-material costs and higher research and development expenses. In addition, higher selling, administrative and general expenses had an impact on full-year results.
Market Conditions & Outlook
- Agriculture & Turf. Worldwide sales of the company's agriculture and turf division are forecast to increase by about 15 percent for fiscal year 2012, with a favorable currency-translation impact of about 1 percent. Farmers in the world's major markets are continuing to experience favorable incomes due to strong demand for agricultural commodities. As well, John Deere's sales are expected to benefit from advanced new products being launched throughout the world and from major expansion projects such as those in emerging markets.
Industry farm-machinery sales in the U.S. and Canada are forecast to increase 5 to 10 percent in 2012, following an advance in 2011. Overall conditions remain positive and demand continues to be strong, especially for high-horsepower equipment.
Industry sales in the EU 27 nations of Western and Central Europe are forecast to be flat for 2012 as a result of general economic concerns in the region. Sales in the Commonwealth of Independent States are expected to be moderately higher, after rising substantially in 2011. Sales in Asia are forecast to be up strongly again in 2012. In South America, industry sales for the year are projected to be flat in relation to the attractive levels of 2011.
Industry sales of turf and utility equipment in the U.S. and Canada are expected to increase slightly in 2012.
- Construction & Forestry. Deere's worldwide sales of construction and forestry equipment are forecast to grow by about 16 percent for fiscal 2012, with a favorable currency-translation impact of about 1 percent. The increase reflects slightly improved market conditions and activity outside of the U.S., including strength in Canada. Construction equipment sales to independent rental companies are expected to see further gains. Deere's sales also are expected to be supported by a range of advanced new products and by geographic expansion. After considerable growth in 2011, world forestry markets are projected to be about the same in 2012 due to weaker economic conditions in Europe.
- Financial Services. Fiscal-year 2012 net income attributable to Deere & Company for the financial services operations is expected to be approximately $450 million. The forecast decline from 2011 is primarily due to an increase in the provision for credit losses, which is anticipated to return to a more typical level, as well as higher selling, administrative and general expenses in support of enterprise growth initiatives. Partially offsetting these items is expected growth in the credit portfolio.