Deere Announces Third-Quarter Earnings of $851 Million

MOLINE, Ill., Aug. 13, 2014 /CNW/ -- Net income attributable to Deere & 
Company (NYSE: DE) was $850.7 million, or $2.33 per share, for the third 
quarter ended July 31, compared with $996.5 million, or $2.56 per share, for 
the same period of 2013. For the first nine months of the year, net income 
attributable to Deere & Company was $2.513 billion, or $6.79 per share, 
compared with $2.730 billion, or $6.97 per share, last year. 
Worldwide net sales and revenues decreased 5 percent, to $9.500 billion, for 
the third quarter and were down 4 percent, to $27.102 billion, for nine 
months. Net sales of the equipment operations were $8.723 billion for the 
quarter and $24.918 billion for nine months, compared with $9.316 billion and 
$26.373 billion for the same periods last year. 
"Deere's third-quarter performance reflected moderating conditions in the 
global farm sector, which have negatively affected demand for farm machinery 
and contributed to lower sales and profits for our agricultural-equipment 
business," said Samuel R. Allen, chairman and chief executive officer. "At the 
same time, our construction and forestry and financial services divisions had 
higher profit, showing the benefit of a broad-based business lineup. Overall, 
it was a quarter of solid performance, with income exceeded only by last 
year's record for the corresponding period." 
Summary of Operations Net sales of the worldwide equipment operations declined 
6 percent for the quarter and nine months compared with the same periods a 
year ago. Sales included price realization of 2 percent for the quarter and 
nine months.  Additionally, sales included an unfavorable currency-translation 
effect of 1 percent for the nine months. Equipment net sales in the United 
States and Canada decreased 8 percent for the quarter and 7 percent year to 
date. Outside the U.S. and Canada, net sales were down 4 percent for the 
quarter, including favorable currency-translation effects of 1 percent, and 
down 3 percent for nine months, including unfavorable currency-translation 
effects of 1 percent. 
Deere's equipment operations reported operating profit of $1.135 billion for 
the quarter and $3.387 billion for nine months, compared with $1.443 billion 
and $3.943 billion last year. The decline for the quarter was due primarily to 
the impact of lower shipment volumes, higher production costs primarily 
related to engine-emission requirements, and the unfavorable effects of 
foreign currency exchange. The year-to-date decline was largely due to the 
impact of lower shipment volumes, unfavorable foreign-exchange effects, higher 
production costs, and a less favorable product mix. Declines for both periods 
were partially offset by price realization. 
Net income of the company's equipment operations was $680 million for the 
third quarter and $2.061 billion for the first nine months, compared with $846 
million and $2.324 billion in 2013. In addition to the operating factors 
mentioned above, a lower effective tax rate benefited both quarterly and 
year-to-date results. 
Financial services reported net income attributable to Deere & Company of 
$162.3 million for the quarter and $452.2 million for nine months compared 
with $150.0 million and $407.9 million last year. The improvement for the 
quarter was due to growth in the credit portfolio, partially offset by a 
higher provision for credit losses and higher selling, administrative and 
general expenses. Year-to-date results improved as a result of growth in the 
credit portfolio and a more favorable effective tax rate. These factors were 
partially offset by lower crop insurance margins, higher selling, 
administrative and general expenses and a higher provision for credit losses. 
Company Outlook & Summary Company equipment sales are projected to decrease 
about 6 percent for fiscal 2014 and to be down about 8 percent for the fourth 
quarter compared with the year-ago periods. Included is an unfavorable 
currency-translation effect of about 1 percent for the year. For 2014, net 
income attributable to Deere & Company is anticipated to be about $3.1 billion. 
Although Deere's full-year earnings are forecast to be somewhat lower than in 
2013, Allen said the company is looking forward to completing another 
successful year and continues to believe the longer-term outlook for its 
businesses holds considerable promise. "For the balance of the year, the 
company will be scaling back production in line with demand for our 
agricultural products," he stated. "These actions illustrate our commitment to 
responding with speed and decisiveness to changes in market conditions." 
Allen pointed out the company's plans to expand its market presence throughout 
the world are on track and continuing to move ahead. "We remain confident the 
company is well-positioned to earn solid returns throughout the business cycle 
and to realize substantial benefits from the world's growing need for food, 
shelter and infrastructure well into the future," he said. 
Equipment Division Performance Agriculture & Turf.  Sales fell 11 percent for 
the quarter and 8 percent for nine months due largely to lower shipment 
volumes, and the previously announced sales of John Deere Landscapes and John 
Deere Water. Additionally, year-to-date sales were lower due to the 
unfavorable effects of currency translation. These factors were partially 
offset by price realization in both the quarter and nine months. 
Operating profit was $941 million for the quarter and $2.967 billion year to 
date, compared with $1.336 billion and $3.684 billion, respectively, last 
year. Lower results for the quarter were driven primarily by the impact of 
lower shipment volumes, higher production costs largely related to 
engine-emission requirements, and the unfavorable effects of foreign-currency 
exchange. The year-to-date decrease was mainly due to lower shipment volumes, 
unfavorable currency exchange, higher production costs, and a less favorable 
product mix. Declines for both periods were partially offset by price 
realization. 
Construction & Forestry. Construction and forestry sales increased 19 percent 
for the quarter and 8 percent for nine months mainly as a result of higher 
shipment volumes and price realization. Increased sales for both periods were 
partially offset by the unfavorable effects of currency translation. 
Operating profit was $194 million for the quarter and $420 million for nine 
months, compared with $107 million and $259 million last year. Quarterly 
operating profit improved primarily due to higher shipment volumes and price 
realization, partially offset by a less favorable product mix. Year-to-date 
results increased mainly due to higher shipment volumes, lower production 
costs, and lower selling, administrative and general expenses. 
Market Conditions & Outlook Agriculture & Turf.  Deere's worldwide sales of 
agriculture and turf equipment are forecast to decrease by about 10 percent 
for fiscal-year 2014, including a negative currency translation effect of 
about 1 percent. 
Although the agricultural economy remains in a relatively healthy state, 
falling commodity prices are contributing to a reduction in farm income. The 
decline is putting pressure on demand for farm equipment, especially larger 
models. At the same time, strength in the U.S. livestock sector is providing 
support to sales of mid- and smaller-size tractors. Based on these factors, 
industry sales for agricultural machinery in the U.S. and Canada are forecast 
to be down about 10 percent for the year. 
Full-year industry sales in the EU28 are forecast to be down about 5 percent 
due to lower crop prices and farm incomes. In South America, industry sales of 
tractors and combines are projected to be down about 15 percent from strong 
2013 levels. Market conditions in the Commonwealth of Independent States have 
deteriorated and industry sales there are expected to be significantly lower 
for the year. Asian sales are projected to be about flat. 
Industry sales of turf and utility equipment in the U.S. and Canada are 
expected to be flat to up 5 percent for 2014. 
Construction & Forestry. Deere's worldwide sales of construction and forestry 
equipment are forecast to increase by about 10 percent for full-year 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. 
Financial Services. Fiscal-year 2014 net income attributable to Deere & 
Company for the financial services operations is expected to be approximately 
$600 million. The outlook reflects improvement over last year due primarily to 
expected growth in the credit portfolio and a more favorable tax rate. These 
factors are projected to be partially offset by higher selling, administrative 
and general expenses, an increase in the provision for credit losses from the 
low level in 2013, and lower crop insurance margins. 
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 $129.2 million 
for the third quarter and $390.0 million year to date, compared with $124.7 
million and $335.6 million for the respective periods last year. Results 
improved for both periods primarily due to growth in the credit portfolio, 
partially offset by a higher provision for credit losses, and higher selling, 
administrative and general expenses. In addition, nine-month results benefited 
from a more favorable effective tax rate.  Net receivables and leases financed 
by JDCC were $33.534 billion at July 31, 2014, compared with $30.096 billion 
last year. 
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), harvest yields, prices for commodities and livestock, crop 
and livestock production expenses, availability of transport for crops, the 
growth and sustainability 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.  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 drier 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, bond and 
other financial 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, tariffs and sanctions in particular jurisdictions or for the benefit 
of certain industries or sectors (including protectionist, economic, punitive 
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/Stage IIIb and Final Tier 4/Stage IV non-road diesel emission requirements 
in the U.S. and European Union), carbon and other greenhouse gas emissions, 
noise and the effects 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 otherwise; and actions by other regulatory bodies 
including changes in laws and regulations affecting the sectors in which the 
company operates.  Trade, financial and other sanctions imposed by the U.S., 
the European Union, Russia and other countries could negatively impact company 
assets, operations, sales, forecasts and results.  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; events that damage the company's reputation or brand; 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 general economic conditions worsen or capital markets 
become volatile, 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 results. 
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). 


                                                             Third Quarter 2014 Press Release
                                                         --------------------------------
                                                             (in millions of dollars)
                                                                    Unaudited
                                    Three Months Ended                                  Nine Months Ended
                                        July 31                                       July 31
                                        -------                                       -------
                                                                      %                                                 
                %


                           2014                 2013                Change                          2014            
 2013             Change 
                           ----                 ----                ------                          ----            
 ----             ------ 
Net sales and revenues: 
   Agriculture and turf          $6,969                        $7,847                      -11                      
$20,211                  $22,029  -8 


       Construction and
        forestry              1,754                1,469               +19                    4,707               4,344 
             +8
                              =====                =====                                     =====               =====
              Total net sales 8,723                9,316                -6                   24,918              26,373 
             -6
       Financial services       656                  587               +12                    1,815               1,650 
            +10
       Other revenues           121                  107               +13                      369                 322 
            +15
                                ---                  ---                                       ---                 ---
         Total net sales and


      revenues                   $9,500                       $10,010                       -5                      
$27,102                  $28,345  -4 
Operating profit: * 
   Agriculture and turf            $941                        $1,336                      -30                      
 $2,967                   $3,684 -19 


       Construction and
        forestry                194                  107               +81                      420                 259 
            +62
       Financial services       249                  234                +6                      660                 629 
             +5
                                ---                  ---                                       ---                 ---
         Total operating
          profit              1,384                1,677               -17                    4,047               4,572 
            -11
    Reconciling items **       (83)               (127)              -35                    (324)              (333)    
         -3
    Income taxes              (450)               (553)              -19                  (1,210)            (1,509)    
        -20
                               ====                 ====                                    ======              ======
         Net income


      attributable to              $851                          $997                      -15                      
 $2,513                   $2,730  -8 


           Deere & Company
             *     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
                   interests.



SOURCE  Deere & Company 
Ken Golden, Director, Global Public Relations, 309-765-5678 
CO: Deere & Company
ST: Illinois
NI: MAC CST ERN EST ERN  
-0- Aug/13/2014 11:00 GMT
 
 
Press spacebar to pause and continue. Press esc to stop.