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Deere & Company says it expects that demand for its agricultural machinery will fall in 2024.
The farm machinery business has been extremely buoyant following the original onset of Covid-19 in mid- 2020.
However, the last few months has seen a marked slowdown in sales, resulting in many previously hard to get models of tractors now available from stock. This situation has been noted by global tractor manufacturer Deere & Company. It announced, in mid-November, an expectation that demand for its agricultural machinery will fall in 2024.
The company also suggests that demand for its agriculture and turf equipment will be down by between 5 and 15% in the US, with a 10% dip in sales likely for Europe. Meanwhile, it’s also anticipating a 5-10% drop in demand for its construction and forestry equipment.
Despite these gloomy predictions, Deere has reported a net income of almost $2.4 billion for the fourth quarter (Q4-2023), up from $2.2 billion in the same period in 2022. The company also noted that net income for the fiscal year 2023 was $10.1 billion – compared with $7.1 billion the previous year.
The financial statement shows that net sales were $13.8 billion for Q4 2023, down from $14.3 billion for the same period last year. Meanwhile, net sales for the year stood at $55.5 billion compared with $47.9 billion in 2022.
The company also noted that production and precision agriculture sales decreased by 6% for the quarter, due to lower shipment volumes that were partially offset by price realisation. Sales of small agriculture and turf equipment were down 13% in Q4, while construction and forestry sales bucked the trend with a rise of 11%.
The company has forecast a lower than expected net income for the 2024 fiscal year of between $7.75 billion to $8.25 billion.
Chairman and chief executive officer of Deere & Company John May said fourth-quarter and full-year results can be attributed to the successful execution of Deere’s smart industrial operating model.
“The value that customers recognise in our industry-leading products and solutions,” he added.
“While our end markets will fluctuate, we are focused on investing in solutions that drive customer value. As evidenced by our guidance for 2024, we are making our company more resilient and better equipped for the future.”
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