The quarterly operating-profit decline was primarily because of decreased shipment volumes, offset by price realization and lower research and development expenses. Nine-month results were lower mainly due to reduced shipment volumes, increases in production costs, an unfavorable product mix and higher selling, administrative and general expenses, partially offset by price realization.
Market Conditions & Outlook
Agriculture & Turf. Deere's worldwide sales of agriculture and turf equipment are forecast to increase by about 7 percent for full-year 2013, including a negative currency translation impact of about 1 percent. Relatively high commodity prices and strong farm incomes are continuing to support a favorable level of demand for farm machinery in much of the world. Deere's sales are further benefiting from global expansion and advanced new products.
Industry sales for agricultural machinery in the U.S. and Canada are forecast to be up about 5 percent for the year, reflecting continued strength in demand for large equipment such as high-horsepower tractors and combines.
Full-year industry sales in the EU28 are forecast to be down about 5 percent due to weakness in the overall economy and soft conditions in the U.K. farm sector. In South America, industry sales are projected to be up about 20 percent as a result of strong market conditions and the impact of government-financing programs in Brazil. Industry sales in the Commonwealth of Independent States are expected to be moderately lower than in 2012, while Asian sales are projected to be little-changed.
In the U.S. and Canada, industry sales of turf and utility equipment are expected to be up about 5 percent for 2013, reflecting improved market conditions.
Construction & Forestry. Deere's worldwide sales of construction and forestry equipment are forecast to decrease by about 8 percent for 2013. The decline mostly reflects a cautious outlook for U.S. economic growth. Global forestry sales are expected to be higher for the year as improved U.S. demand more than offsets weakness in European markets.
Financial Services. Full-year 2013 net income attributable to Deere & Company for the financial services operations is expected to be approximately $560 million. The forecast improvement over last year is due primarily to expected growth in the credit portfolio and lower crop insurance claims, partially offset by higher selling, administrative and general expenses.