Net income to Deere & Company in the third quarter ended July 30, 2017, grew 31% to $641.8 million, or $1.97 per share, compared with the same quarter in 2016. The first nine months of Deere’s fiscal 2017 saw net income soar 33% over 2016 levels to $1.6 billion, or $5.11 per share.
Net revenues increased 16% to $7.8 billion for the third quarter, and rose 8%, to $21.7 billion, for their first nine months. Equipment operations sales rose 17% in the third quarter to $6.8 billion, and 6% to $18.8 billion for nine months.
"We are seeing higher overall demand for our products with farm machinery sales in South America experiencing strong gains and construction equipment sales rising sharply," said Samuel R. Allen, chairman and chief executive officer. “Deere's performance also is being assisted by an advanced product portfolio and the continuing impact of a flexible cost structure and lean asset base."
Summary of operations
Equipment sales in the United States and Canada increased 11% for the quarter and were down 1% for the first nine months. Outside the U.S. and Canada, net sales increased 25% for the quarter and 17% for nine months.
Deere's equipment operations reported operating profit of $795 million for the quarter and $2.152 billion for nine months, compared with $625 million and $1.526 billion, respectively, last year.
Financial services reported net income of $131.2 million for the quarter and $349.1 million for nine months compared with $125.9 million and $357.9 million last year.
Company outlook
Company equipment sales are projected to increase about 10% for fiscal 2017 and be up about 24% for the fourth quarter compared with the same periods of 2016. Net sales and revenues are projected to increase about 11% for fiscal 2017 with net income of about $2.075 billion.
"Deere's ability to deliver consistently strong financial results is proof of our success building a more durable business model," Allen said. "We are continuing to find ways to make our operations more efficient and profitable while providing even more value to our global customers. As a result, we're confident Deere is well-positioned to continue its strong performance and to fully capitalize on the world's increasing need for advanced machinery and services in the future."
Equipment division performance
Agriculture & Turf sales increased 13% for the quarter and 5% for nine months primarily due to higher shipment volumes and price realization, partially offset by higher warranty costs.
Operating profit was $685 million for the quarter and $1.899 billion year to date, compared with respective totals of $571 million and $1.329 billion last year.
Construction & Forestry sales increased 29% for the quarter and 10% for nine months mainly as a result of higher shipment volumes. Results were negatively affected by higher sales-incentive expenses for the quarter and by higher warranty costs.
Operating profit was $110 million for the quarter and $253 million for nine months, compared with $54 million and $197 million last year.
Market conditions and outlook
Agriculture & Turf. Deere's worldwide sales of agriculture and turf equipment are forecast to increase by about 9% for fiscal-year 2017. Industry sales for agricultural equipment in the U.S. and Canada are forecast to be down about 5% for 2017, reflecting weakness in the livestock sector and the continuing impact of low crop prices. The decline is affecting both large and small equipment.
Industry sales of turf and utility equipment in the U.S. and Canada are expected to be about flat for 2017.
Construction & Forestry. Deere's worldwide sales of construction and forestry equipment are forecast to be up about 15% for 2017. The forecast reflects moderate economic growth worldwide. In forestry, global industry sales are expected to be down 5% to 10% due to soft conditions in North America.
