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Iconic farming, forestry and construction equipment maker Deere missed fourth quarter earnings reported before the open Wednesday. $DE cited global risks, higher US dollar and higher raw materials and freight costs fueling higher expenses and uncertainty..



Deere Wirtgen

Deere & Company NYSE: DE  Reported Earnings Before Open Wednesday

 $2.30 Missed $2.77 EPS AND $8.34 billion Missed $8.59 billion forecast in revenue. 

Earnings 

Deere & Co. reported earnings of $2.30 per share. Revenue rose 18% to $8.34 billion. Analysts had expected EPS of $2.43 as revenue grew  to $8.594 billion. The higher US dollar, trade war uncertainty and higher costs all bit into sales.

 

Deere & Company NYSE: DE

Market Reaction - Pre-market $143.28 +4.76 (+3.44%)

Highlights

  • Net sales of equipment operations grew 17.6% to $8.34 billion. The company benefited from a further improvement in market conditions and a favorable customer response to its lineup of advanced products.
  • Equipment net sales in the United States and Canada increased by 21% for the quarter.
  • Outside of the U.S. and Canada, net sales rose 13% as currency translation had a negative effect of 7% on the sales.
  • Sales from Agriculture & Turf rose 3% as higher shipment volumes and price realization offset the unfavorable impact of currency translation.
  • Construction and forestry sales climbed 65% on higher shipment volumes, lower warranty-related claims, and price realization.

 

DE Q4 2018 earnings

Outlook

Deere expects equipment sales to rise 7% for fiscal 2019, with December 2017 acquisition of Wirtgen included in all 12 months.

"In our view, the company remains well-positioned to capitalize on growth in the world's agricultural and construction equipment markets.  The replacement cycle for farm machinery is very much alive, despite tensions over global trade and other geopolitical issues. In addition, we are experiencing a strong response to the advanced features and technology found in our new products, which are helping attract customers throughout the world." "Based on these factors, we remain confident in the company's present direction and believe Deere is poised to deliver improved operating performance and significant value to its customers and investors in the future," CEO Sam Allen said

Deere & Company Q3 Earnings Recap

 $2.59 Missed $2.77 EPS But $9.29 billion Beat $9.17 billion forecast in revenue. 

Earnings 

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.

DE Earnings Q2 18

Highlights

  • 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%.

Guidance

  • 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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