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Iconic farming, forestry and construction equipment maker Deere missed second quarter earnings reported before the open Friday. $DE also cut guidance citing 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 Friday

$3.52 Missed $3.57 EPS But $10.27 billion Beat $10.15 billion forecast in revenue. 

Earnings 

Deere & Co. reported earnings rose 12% to $3.52 a share in Q1 on revenue up 6% to $10.27 billion. Analysts had expected Deere earnings per share to grow 14% to $3.57 and revenue was expected to rise 4.1% to $10.15 billion, according to Zacks Investment Research.

The company reported worldwide net sales and revenue of $11.3 billion, up 6% compared to the prior year. Net sales rose 5% to $10.3 billion. On a GAAP basis, net income fell to $1.13 billion, or $3.52 per share, from $1.20 billion, or $3.67 per share, last year. Adjusted EPS rose 12% to $3.52 but fell short of the forecasts of $3.61.

Deere & Company NYSE: DE

Market Reaction - Pre-market $139.40 −6.59 (-4.51%)

Highlights

"Ongoing concerns about export market access, near-term demand for commodities such as soybeans, and a delayed planting season in much of North America are causing farmers to become much more cautious about making major purchases," Deere CEO Samuel Allen said.

  • Net sales for the equipment operations increased 5% year-over-year to $10.2 billion.
  • Deere recorded sales increases in the Agriculture & Turf and Construction & Forestry segments of 3% and 11%, respectively, helped by higher shipment volumes and price realization.
  • Financial Services revenue grew 11% to $886 million.
  • The company’s financial services subsidiary John Deere Capital Corporation recorded a 14% growth in revenue to $703 million.

Deere Company Q2 2019 Earnings

Outlook

Deere lowered 2019 sales growth guidance from 7% to 5%, including a 3% currency adjustment. Management pared net income guidance from $3.6 billion to $3.3 billion.

The company lowered its guidance for fiscal-year 2019 due to uncertainty in agricultural markets.  Company equipment sales are expected to increase by about 5% for the year. Industry sales of agricultural equipment in the US and Canada are forecast to be flat to up 5% for the full year of 2019, while industry sales in the EU28 member nations are forecast to be about flat. Industry sales of turf and utility equipment in the US and Canada are expected to be flat to up 5% for 2019. In forestry, global industry sales are expected to be flat to up 5% mainly due to improved demand in EU28 countries and Russia.

The Wirtgen acquisition

The Wirtgen aquistion last year 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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