John Deere announced record first quarter earnings with a net income of $681.1 million for the first quarter ending January 31, 2014. This is compared with $649.7 million for the same period last year.
Worldwide net sales and revenues for the first quarter increased 3 percent, to $7.654 billion, compared with $7.421 billion last year. Net sales of the equipment operations were $6.949 billion for the quarter compared with $6.793 billion a year ago.
Net sales of the worldwide equipment operations increased 2 percent for the quarter. Sales included price increases of 2 percent and an unfavorable currency-translation effect of 2 percent. Equipment net sales in the United States and Canada rose 3 percent for the quarter. Outside the U.S. and Canada, net sales increased 2 percent, including an unfavorable currency-translation effect of 3 percent.
Deere's equipment operations reported operating profit of $891 million for the quarter, compared with $837 million last year. Results benefited from price realization, partially offset by a less favorable product mix and the unfavorable effects of foreign-currency exchange.
Construction and forestry sales rose 4 percent for the quarter, with operating profit of $94 million compared with $71 million a year ago. The improvement in operating profit was due primarily to lower production costs, decreased research and development expenses, and price realization. These factors were partially offset by the impact of lower production volumes.
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 improved sales in European markets.
Sales for agriculture and turf increased 2 percent for the quarter due largely to price realization and higher shipment volumes, partially offset by the unfavorable effects of currency translation. Operating profit was $797 million compared with $766 million for the quarter last year. The improvement was due primarily to price realization, partially offset by a less favorable product mix and the unfavorable effects of foreign-currency exchange.
Deere's worldwide sales of agriculture and turf equipment are forecast to decrease by about 6 percent for fiscal 2014. Although farm incomes are expected to remain at healthy levels in 2014, they are forecast to be lower than in the previous year. In Deere's view, the decline will have a dampening effect on demand, especially for larger models of equipment. Partly as a result of these factors, industry sales for agricultural machinery in the U.S. and Canada are forecast to be down 5 to 10 percent for the year, with the decline mainly reflecting lower sales of high-horsepower tractors and combines.
In the U.S. and Canada, industry sales of turf and utility equipment are expected to be up about 5 percent for 2014 as a result of improved market conditions.
Company equipment sales are projected to decrease about 3 percent for fiscal 2014 and be down about 6 percent for the second quarter compared with the same periods of 2013. For the full year, net income attributable to Deere & Company is anticipated to be approximately $3.3 billion.