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Deere and Co, the owners of the John Deere tractor brand, has reviewed its earnings forecast for the financial year to October, saying it will finish at about US$1.9 billion despite sales having fallen by 19% in the year so far, not 17% as previously forecast.
Earnings Feb-April dropped 30% to US$690.6 million, on revenues down 20% to US$ 7.40b, much less than forecast.
Samuel Allen, chairman and chief executive, said “JD expects to be solidly profitable in 2015 despite a pullback in the farm machinery sector. All in all we remain confident in the company’s direction and our ability to meet our customers’ needs.”
First quarter results were noteworthy in light of the weakness blighting the global agricultural sector.
Deere agricultural sales fell 25% to US$ 5.77b; the construction division gained 2% to finish at US$ 1.63 billion.
Lower commodity prices and falling farm incomes put pressure on demand for agricultural machinery, particularly larger items such as combine harvesters and large tractors traditionally bought by Canadian and North American grain farmers.
Deere predicts the market in Brazil will fall by 15-20% due to economic uncertainty and the high-interest government loans normally used to fund agriculture.
The Canadian and US markets look likely to fall by only 25% as the the livestock sector show signs of rallying on the back of low grain prices.
The arrival of new F8 and F9 designations for its 8000 and 9000 series forage harvesters, signals a swag of upgrades from John Deere, highlighted by topping the 1000hp mark for the first time.
While tractors combines and machinery for agriculture and construction is still its key business, John Deere appears to be taking opportunities in the hightech sector via acquisition, with the recent purchase of Sentera, a Minnesota-based company that specialises in equipment for capturing and interpreting aerial images.
John Deere have recently announced upgrades to its round baler offerings, with all models of this latest generation equipped with advanced ISOBUS capabilities, allowing them to be fully integrated into the John Deere Operations Center.
With agriculture in New Zealand coming out of the doldrums over the last few months and the recent announcement of a 20% tax write-off for capital purchases, it likely that farmers will be spending on tractors.
Recent results from its 2024 financial year has seen global farm machinery player John Deere record a significant slump in the profits of its agricultural division over the last year, with a 64% drop in the last quarter of the year, compared to that of 2023.
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