Deere Announces Record First-Quarter Earnings of $650 Million

- Earnings per share climb 27% on 10% gain in net sales and revenues. 
- Results benefit from healthy farm conditions, skillful execution of business 
- Full-year profit forecast increased. 
MOLINE, Ill., Feb. 13, 2013 /CNW/ - Net income attributable to Deere & Company 
(NYSE: DE) was $649.7 million, or $1.65 per share, for the first quarter ended 
January 31, compared with $532.9 million, or $1.30 per share, for the same 
period last year. 
Worldwide net sales and revenues for the first quarter increased 10 percent, 
to $7.421 billion, compared with $6.767 billion last year. Net sales of the 
equipment operations were $6.793 billion for the quarter compared with $6.119 
billion a year ago. 
"With our eleventh consecutive quarter of record earnings, John Deere has 
started 2013 on a positive note and is setting the stage for another 
successful year," said Samuel R. Allen, chairman and chief executive officer. 
"These results are further proof of the adept execution of operating and 
marketing plans aimed at expanding our global market presence while 
maintaining a tight grip on costs and assets," he said. "As a result, Deere 
remains well-positioned to earn solid profits in today's fragile global 
economy and, longer term, to benefit from major trends that we continue to 
believe hold great promise for the company and its customers and investors." 
Summary of Operations 
Net sales of the worldwide equipment operations rose 11 percent for the 
quarter. Sales included price increases of 3 percent and an unfavorable 
currency-translation effect of 1 percent. Equipment net sales in the United 
States and Canada increased 18 percent for the quarter. Outside the U.S. and 
Canada, net sales increased 2 percent for the quarter, including an 
unfavorable currency-translation effect of 3 percent. 
Deere's equipment operations reported operating profit of $837 million for the 
quarter, compared with $698 million last year. Results benefited from higher 
shipment volumes and price realization. These factors were partially offset by 
increases in production costs, selling, administrative and general expenses, 
warranty costs, and research and development expenses. The increased 
production costs related primarily to manufacturing-overhead expenses in 
support of growth, new products, and engine-emission requirements. 
Net income of the company's equipment operations was $525 million for the 
quarter, compared with $416 million last year. The same operating factors 
mentioned above, along with a lower effective tax rate and increased interest 
expense, affected the quarterly results. 
Financial services reported net income attributable to Deere & Company of 
$132.9 million for the quarter compared with $119.1 million last year. The 
improvement was primarily related to growth in the credit portfolio and higher 
crop insurance margins, partially offset by increased selling, administrative 
and general expenses. In addition, last year's results benefited from revenue 
related to wind energy credits. 
Company Outlook & Summary 
Company equipment sales are projected to be up about 6 percent for fiscal 2013 
and up about 4 percent for the second quarter compared with the same periods 
of 2012. For the full year, net income attributable to Deere & Company is 
anticipated to be approximately $3.3 billion. 
Although Deere is looking to achieve strong results in 2013, persistent global 
economic and fiscal concerns warrant continued caution. "We're confident our 
investment in new products and additional capacity will help Deere fully 
capitalize on the world's growing need for food, shelter and infrastructure in 
the years ahead," Allen said. "However, the near-term outlook is being 
tempered by uncertainties over fiscal, economic and trade issues that are 
undermining business confidence and restraining growth." 
Equipment Division Performance 
Agriculture & Turf. Sales increased 16 percent for the quarter largely due to 
higher shipment volumes and price realization, partially offset by the 
unfavorable effects of currency translation. Operating profit was $766 million 
compared with $574 million for the quarter last year. The improvement was 
primarily due to higher shipment volumes and price realization. These factors 
were partially offset by increases in selling, administrative and general 
expenses, warranty costs, production costs and research and development 
Construction & Forestry. Construction and forestry sales decreased 7 percent. 
Operating profit for the quarter was $71 million compared with $124 million a 
year ago. The reduced operating profit was primarily due to lower shipment 
volumes. In addition, higher production costs, an unfavorable product mix, as 
well as increases in research and development and selling, administrative and 
general expenses were offset by price realization. 
Market Conditions & Outlook 
Agriculture & Turf. Worldwide sales of agriculture and turf equipment are 
forecast to increase by about 6 percent for full-year 2013. Relatively high 
commodity prices and strong farm incomes are expected to continue supporting a 
favorable level of demand for farm machinery during the year. Deere's sales 
are expected to see further benefit from global expansion and a number of 
advanced new products. 
Industry sales for agricultural machinery in the U.S. and Canada are forecast 
to be flat to up 5 percent in relation to last year's healthy levels. Caution 
in the U.S. livestock sector is expected to partly offset continued strength 
in demand for large equipment such as high-horsepower tractors and combines. 
Full-year industry sales in the EU27 are forecast to be down about 5 percent 
due to weakness in the overall economy and last year's poor harvest in the 
U.K. In South America, industry sales are projected to be up 10 to 15 percent 
as a result of strong market conditions in Brazil. Industry sales in the 
Commonwealth of Independent States are expected to be down slightly from 2012, 
while Asian sales are projected to be slightly higher due to some 
strengthening in the Chinese economy. 
In the U.S. and Canada, industry sales of turf and utility equipment are 
expected to be about flat for 2013, reflecting a continuation of cautious 
consumer sentiment. Deere's sales are expected to increase more than the 
industry due to the impact of new products. 
Construction & Forestry. Deere's worldwide sales of construction and forestry 
equipment are forecast to increase by about 3 percent for 2013. The increase 
reflects a cautious outlook for U.S. economic growth, higher international 
sales of construction equipment, and flat sales in world forestry markets. In 
the forestry sector, further weakness in European markets is expected to 
offset higher U.S. demand. 
Financial Services. Full-year 2013 net income attributable to Deere & Company 
for the financial services operations is expected to be approximately $540 
million. The forecast improvement is primarily due to expected growth in the 
credit portfolio and lower crop insurance claims. These factors are projected 
to be partially offset by an increase in the provision for credit losses. 
Though higher than in 2012, the provision is anticipated to remain below its 
historical average. 
John Deere Capital Corporation 
The following is disclosed on behalf of the company's financial services 
subsidiary, John Deere Capital Corporation (JDCC), in connection with the 
disclosure requirements applicable to its periodic issuance of debt securities 
in the public market. 
Net income attributable to John Deere Capital Corporation was $105.0 million 
for the first quarter, compared with $93.3 million last year. Results improved 
for the quarter primarily due to growth in the credit portfolio, partially 
offset by higher selling, administrative and general expenses. 
Net receivables and leases financed by JDCC were $26.329 billion and $22.486 
billion at January 31, 2013 and 2012, respectively. 
Safe Harbor Statement 
Safe Harbor Statement under the Private Securities Litigation Reform Act of 
1995:  Statements under "Company Outlook & Summary," "Market Conditions & 
Outlook," and other forward-looking statements herein that relate to future 
events, expectations, trends and operating periods involve certain factors 
that are subject to change, and important risks and uncertainties that could 
cause actual results to differ materially.  Some of these risks and 
uncertainties could affect particular lines of business, while others could 
affect all of the company's businesses. 
The company's agricultural equipment business is subject to a number of 
uncertainties including the many interrelated factors that affect farmers' 
confidence.  These factors include worldwide economic conditions, demand for 
agricultural products, world grain stocks, weather conditions (including its 
effects on timely planting and harvesting), soil conditions (including low 
subsoil moisture from recent drought conditions), harvest yields, prices for 
commodities and livestock, crop and livestock production expenses, 
availability of transport for crops, the growth of non-food uses for some 
crops (including ethanol and biodiesel production), real estate values, 
available acreage for farming, the land ownership policies of various 
governments, changes in government farm programs and policies (including those 
in Argentina, Brazil, China, the European Union, India, Russia and the U.S.), 
international reaction to such programs, changes in and effects of crop 
insurance programs, global trade agreements, animal diseases and their effects 
on poultry, beef and pork consumption and prices, crop pests and diseases, and 
the level of farm product exports (including concerns about genetically 
modified organisms). 
Factors affecting the outlook for the company's turf and utility equipment 
include general economic conditions, consumer confidence, weather conditions, 
customer profitability, consumer borrowing patterns, consumer purchasing 
preferences, housing starts, infrastructure investment, spending by 
municipalities and golf courses, and consumable input costs. 
General economic conditions, consumer spending patterns, real estate and 
housing prices, the number of housing starts and interest rates are especially 
important to sales of the company's construction and forestry equipment.  The 
levels of public and non-residential construction also impact the results of 
the company's construction and forestry segment.  Prices for pulp, paper, 
lumber and structural panels are important to sales of forestry equipment. 
All of the company's businesses and its reported results are affected by 
general economic conditions in the global markets in which the company 
operates, especially material changes in economic activity in these markets; 
customer confidence in general economic conditions; foreign currency exchange 
rates and their volatility, especially fluctuations in the value of the U.S. 
dollar; interest rates; and inflation and deflation rates.  General economic 
conditions can affect demand for the company's equipment as well.  Uncertainty 
about and actual government spending and taxing could adversely affect the 
economy, employment, consumer and corporate spending, and company results. 
Customer and company operations and results could be affected by changes in 
weather patterns (including the effects of drought conditions in parts of the 
U.S. and dryer than normal conditions in certain other markets); the political 
and social stability of the global markets in which the company operates; the 
effects of, or response to, terrorism and security threats; wars and other 
conflicts and the threat thereof; and the spread of major epidemics. 
Significant changes in market liquidity conditions and any failure to comply 
with financial covenants in credit agreements could impact access to funding 
and funding costs, which could reduce the company's earnings and cash flows.  
Financial market conditions could also negatively impact customer access to 
capital for purchases of the company's products and customer confidence and 
purchase decisions; borrowing and repayment practices; and the number and size 
of customer loan delinquencies and defaults.  A debt crisis, in Europe or 
elsewhere, could negatively impact currencies, global financial markets, 
social and political stability, funding sources and costs, asset and 
obligation values, customers, suppliers, and company operations and results.  
State debt crises also could negatively impact customers, suppliers, demand 
for equipment, and company operations and results.  The company's investment 
management activities could be impaired by changes in the equity and bond 
markets, which would negatively affect earnings. 
Additional factors that could materially affect the company's operations, 
access to capital, expenses and results include changes in and the impact of 
governmental trade, banking, monetary and fiscal policies, including financial 
regulatory reform and its effects on the consumer finance industry, 
derivatives, funding costs and other areas, and governmental programs, 
policies and tariffs in particular jurisdictions or for the benefit of certain 
industries or sectors (including protectionist and expropriation policies and 
trade and licensing restrictions that could disrupt international commerce); 
actions by the U.S. Federal Reserve Board and other central banks; actions by 
the U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures 
Trading Commission and other financial regulators; actions by environmental, 
health and safety regulatory agencies, including those related to engine 
emissions (in particular Interim Tier 4, Final Tier 4 and Stage IIIb non-road 
diesel emission requirements), carbon and other greenhouse gas emissions, 
noise and the risk of climate change; changes in labor regulations; changes to 
accounting standards; changes in tax rates, estimates, and regulations and 
company actions related thereto; compliance with U.S. and foreign laws when 
expanding to new markets; and actions by other regulatory bodies including 
changes in laws and regulations affecting the sectors in which the company 
operates.  Customer and company operations and results also could be affected 
by changes to GPS radio frequency bands or their permitted uses. 
Other factors that could materially affect results include production, design 
and technological innovations and difficulties, including capacity and supply 
constraints and prices; the availability and prices of strategically sourced 
materials, components and whole goods; delays or disruptions in the company's 
supply chain or the loss of liquidity by suppliers; the failure of suppliers 
to comply with laws, regulations and company policy pertaining to employment, 
human rights, health, safety, the environment and other ethical business 
practices; start-up of new plants and new products; the success of new product 
initiatives and customer acceptance of new products; changes in customer 
product preferences and sales mix whether as a result of changes in equipment 
design to meet government regulations or for other reasons; gaps or 
limitations in rural broadband coverage, capacity and speed needed to support 
technology solutions; oil and energy prices and supplies; the availability and 
cost of freight; actions of competitors in the various industries in which the 
company competes, particularly price discounting; dealer practices especially 
as to levels of new and used field inventories; labor relations; acquisitions 
and divestitures of businesses, the integration of new businesses; the 
implementation of organizational changes; difficulties related to the 
conversion and implementation of enterprise resource planning systems that 
disrupt business, negatively impact supply or distribution relationships or 
create higher than expected costs; security breaches and other disruptions to 
the company's information technology infrastructure; changes in company 
declared dividends and common stock issuances and repurchases. 
Company results are also affected by changes in the level and funding of 
employee retirement benefits, changes in market values of investment assets, 
the level of interest and discount rates, and compensation, retirement and 
mortality rates which impact retirement benefit costs, and significant changes 
in health care costs including those which may result from governmental action. 
The liquidity and ongoing profitability of John Deere Capital Corporation and 
other credit subsidiaries depend largely on timely access to capital to meet 
future cash flow requirements and fund operations and the costs associated 
with engaging in diversified funding activities and to fund purchases of the 
company's products.  If market uncertainty increases and general economic 
conditions worsen, funding could be unavailable or insufficient.  
Additionally, customer confidence levels may result in declines in credit 
applications and increases in delinquencies and default rates, which could 
materially impact write-offs and provisions for credit losses.  The failure of 
reinsurers of the company's insurance business also could materially affect 
The company's outlook is based upon assumptions relating to the factors 
described above, which are sometimes based upon estimates and data prepared by 
government agencies.  Such estimates and data are often revised.  The company, 
except as required by law, undertakes no obligation to update or revise its 
outlook, whether as a result of new developments or otherwise.  Further 
information concerning the company and its businesses, including factors that 
potentially could materially affect the company's financial results, is 
included in the company's other filings with the SEC (including, but not 
limited to, the factors discussed in Item 1A. Risk Factors of the company's 
most recent annual report on Form 10-K and quarterly reports on Form 10-Q). 

    First Quarter 2013 Press Release

(in millions of dollars)

                                           Three Months Ended
                                           January 31
                                           2013     2012

Net sales and revenues:

Agriculture and turf                       $ 5,491  $ 4,724  +16

Construction and forestry                  1,302    1,395    -7

Total net sales                            6,793    6,119    +11

Financial services                         527      548      -4

Other revenues                             101      100      +1

Total net sales and revenues               $ 7,421  $ 6,767  +10
    Operating profit *

Agriculture and turf                       $ 766    $ 574    +33

Construction and forestry                  71       124      -43

Financial services                         197      175      +13

Total operating profit                     1,034    873      +18

Reconciling items **                       (95)     (74)     +28

Income taxes                               (289)    (266)    +9

Net income attributable to Deere & Company $ 650    $ 533    +22

Operating profit is income from continuing operations 
before corporate expenses, certain external interest
*  expense, certain foreign exchange gains and losses and 
income taxes. Operating profit of the financial services 
segment includes the effect of interest expense and foreign 
exchange gains or losses. 
Reconciling items are primarily corporate expenses, certain
** external interest expense, certain foreign exchange gains 
and losses and net income attributable to noncontrolling 
Ken Golden, Director, Global Public Relations, 309-765-5678 
SOURCE: Deere & Company 
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CO: Deere & Company
ST: Illinois
-0- Feb/13/2013 12:03 GMT
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