Iconic farming, forestry and construction equipment maker Deere missed 2nd quarter earnings Friday. $DE beat on revenue but higher raw materials and freight costs saw expenses surge. .
Iconic farming, forestry and construction equipment maker Deere missed 2nd quarter earnings Friday . $DE beat on revenue but higher raw materials and freight costs saw expenses surge.
Deere & Company NYSE: DE Missed Earnings Before Open Friday
$2.59 Missed $2.77 EPS But $9.29 billion Beat $9.17 billion forecast in revenue.
Net income grew to $910.3 million or $2.78 per share included a tax benefit compared to $641.8 million or $1.97 per share in the prior-year period. Adjusted net income was $849 million or $2.59 per share. EPS missed the forecast $2.77, but beat expected revenue of $9.17 billion. Revenues were $9.29 billion, up 32% from the same period last year helped by strength in key markets.
Deere & Company NYSE: DE
Market Reaction – Pre-market $133.15 −$4.20 (-3.06%)
“Farm machinery sales in North America and Europe made solid gains, while construction equipment sales moved sharply higher and received significant support from our Wirtgen road-building unit. At the same time, we have continued to face cost pressures for raw materials and freight, which are being addressed through a combination of cost management and pricing actions,” said CEO Samuel Allen.
- Worldwide net sales and revenues of $10.3 billion, up 32% from the same period last year.
- Equipment net sales rose 36% to $9.3 billion, helped by strength in key markets.
- Costs and expenses rose to $9.1 billion versus $6.9 billion in the prior-year quarter.
- Performance in the third quarter benefited from favorable conditions for agricultural and construction equipment as well as the Wirtgen Group acquisition.
- The Wirtgen Group acquisition added 17% to net sales for the quarter.
- Farm machinery sales saw good gains in North America and Europe
- Construction equipment sales posted significant increases.
- Equipment net sales in the US and Canada rose 29% for the quarter while outside the US and Canada, sales rose 45%.
- Deere & Company expects equipment sales to increase by about 21% for the fourth quarter of 2018 and by about 30% for the full year of 2018 compared to the respective same periods in 2017.
- Net sales and revenues for full-year 2018 are expected to grow around 26%. GAAP net income is expected to come in at $2.3 billion while adjusted net income is expected to be $3.1 billion.
- Worldwide sales of agriculture and turf equipment are expected to increase by about 15% for fiscal-year 2018 while for construction and forestry equipment, sales are expected to grow about 81%. In 2018, net income for financial services is estimated to total approx. $815 million.
The Wirtgen acquisition has expanded $DE into the road construction business that is in a position to gain massively from President Trump’s infrastructure spending plans.
Competitors include Caterpillar (CAT), Manitowoc (MTW) and Terex (TEX).
Source: Deere, AlphaStreet
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