JOHN DEERE

Deere Fiscal 2013 Sales Up 5% Despite 3% Q4 Slip

Deere & Company net income in its fiscal fourth quarter ended October 31, 2013, was $806.8 million, or $2.11 per share, up more than 17 percent compared to the fourth quarter of 2012. Fiscal 2013 net income was up more than 15 percent to $3.537 billion, or $9.09 per share.

Worldwide net sales and revenues decreased 3 percent, to $9.451 billion, for the fourth quarter and increased 5 percent, to $37.795 billion, for the full year. Net sales of the equipment operations were down 4.7 percent to $8.624 billion for the quarter yet up 4.5 percent to $34.998 billion for the year.

Construction and forestry sales decreased 8 percent for the quarter and the full year. Operating profit for the division edged down 1.7% to $118 million for the quarter but plunged 20.6 percent to $378 million for the year.

Deere Announces Record Fourth-Quarter Earnings of $807 Million

"During the year, Deere continued with a record number of product introductions and completed seven new factories, in Brazil, Russia, India and China," said Samuel R. Allen, chairman and chief executive officer. Income for the periods was higher than in any previous fourth quarter or full year, he pointed out. “These products and additional capacity are essential to helping the company expand its global customer base and realize its long-term business objectives.

"Deere's performance is a testament to our ability to execute our business plans, which stress the rigorous management of costs and assets," Allen added.

Equipment net sales in the United States and Canada decreased 6 percent for the quarter and increased 5 percent for the year. Outside the U.S. and Canada, net sales decreased 2 percent for the quarter and increased 4 percent for the year, with unfavorable currency-translation effects of 4 percent and 3 percent for these periods.

Deere's equipment operations reported operating profit up 6 percent to $1.114 billion for the quarter and up 15 percent to $5.058 billion for the year.

Financial services reported net income up 29 percent to $157.1 million for the quarter and up 23 percent to $565.0 million for the year. Results for both periods were aided by growth in the credit portfolio and higher crop insurance margins, partially offset by higher selling, administrative and general expenses.

2014 Outlook

Company equipment sales are projected to decrease about 3 percent for fiscal 2014 and be down about 2 percent for the first quarter compared with year-ago periods. For fiscal 2014, net income attributable to Deere & Company is anticipated to be about $3.3 billion. The outlook contemplates the sale of 60 percent of John Deere Landscapes operations, as previously announced.

Deere's worldwide sales of agriculture and turf equipment are forecast to decrease by about 6 percent for full-year 2014. Although commodity prices and farm incomes are expected to remain at healthy levels in 2014 by historical standards, they are forecast to be lower than in 2013. The company believes the decline will have a dampening effect on demand, primarily for large farm equipment.

Industry sales for agricultural machinery in the U.S. and Canada are forecast to be down 5 to 10 percent for the year.

Full-year industry sales in the EU28 are forecast to be down about 5 percent due to lower commodity prices and farm incomes. In South America, industry sales of tractors and combines are projected to be down 5 to 10 percent from strong 2013 levels. Industry sales in the Commonwealth of Independent States are expected to be down slightly for the year, while Asian sales are projected to be up slightly.

In the U.S. and Canada, industry sales of turf and utility equipment are expected to be up about 5 percent for 2014, reflecting improved market conditions.

Deere's worldwide sales of construction and forestry equipment are forecast to increase by about 10 percent for 2014. The gain reflects further economic recovery and higher housing starts in the U.S. as well as sales increases outside the U.S. and Canada. Global forestry sales are expected to be up for the year due to general economic growth and higher sales in European markets.

Full-year 2014 net income for Deere’s financial services operations is expected to be approximately $600 million. The outlook reflects improvement primarily due to continued growth in the credit portfolio, partially offset by a projected increase in the provision for credit losses from the low level in 2013.

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