MOLINE, Ill., Nov. 26, 2014 /PRNewswire/ -- Net income
attributable to Deere & Company (NYSE: DE) was $649.2 million, or $1.83 per share, for the fourth quarter ended
October 31, compared with
$806.8 million, or $2.11 per share, for the same period of 2013. For
fiscal 2014, net income attributable to Deere & Company was
$3.162 billion, or $8.63 per share, compared with $3.537 billion, or $9.09 per share, in 2013.
Worldwide net sales and revenues decreased 5 percent, to
$8.965 billion, for the fourth
quarter and were down 5 percent, to $36.067
billion, for the full year. Net sales of the equipment
operations were $8.043 billion for
the quarter and $32.961 billion for
the year, compared with $8.624
billion and $34.998 billion
for the same periods in 2013.
"John Deere has completed another year of solid performance in
spite of weaker conditions in the global farm sector, which caused
sales and earnings to decline from the record totals of 2013," said
Samuel R. Allen, chairman and chief
executive officer. "The slowdown has been most pronounced in the
sale of large farm machinery, including many of our most profitable
models. Nevertheless, our success managing costs and assets and
establishing a broad-based business lineup has allowed us to
deliver strong results and remain in a sound financial
condition."
Further, Allen noted that the company produced healthy levels of
cash flow for the year, much of which was returned to investors in
the form of dividends and share repurchases. Dividends and buybacks
in 2014 totaled a record $3.5
billion.
Summary of Operations
Net sales of the worldwide
equipment operations declined 7 percent for the quarter and
decreased 6 percent for the year compared with the same periods in
2013. Sales included price realization of 1 percent for the quarter
and 2 percent for the full year. Additionally, sales included
an unfavorable currency-translation effect of 1 percent for the
quarter and for the year. Equipment net sales in the United States and Canada decreased 10 percent for the quarter
and 8 percent for the year. Outside the U.S. and Canada, net sales were down 2 percent for the
quarter and down 3 percent for the year, with unfavorable
currency-translation effects of 2 percent and 1 percent for these
periods.
Deere's equipment operations reported operating profit of
$910 million for the quarter and
$4.297 billion for the full year,
compared with $1.114 billion and
$5.058 billion in 2013. The decline
for the quarter was due primarily to the impact of a less favorable
product mix, lower shipment and production volumes, higher
production costs primarily related to engine emission programs,
increased warranty costs and an impairment charge for the
China operations. The year's
decline was due primarily to the impact of lower shipment and
production volumes, a less favorable product mix, the unfavorable
effects of foreign-currency exchange and higher production costs
primarily related to engine emission programs. Declines for both
periods were partially offset by price realization. Last year's
results also were affected by impairment charges for the John Deere
Landscapes and John Deere Water operations.
Net income of the company's equipment operations was
$488 million for the fourth quarter
and $2.548 billion for the year,
compared with $650 million and
$2.974 billion in 2013.
Financial services reported net income attributable to Deere
& Company of $172.2 million for
the quarter and $624.5 million for
the year compared with $157.1 million
and $565.0 million in 2013. The
improvement for both periods was due to growth in the credit
portfolio, partially offset by lower crop insurance margins, higher
selling, administrative and general expenses and a higher provision
for credit losses. Additionally, yearly results benefited from a
more favorable effective tax rate.
Company Outlook & Summary
Company equipment sales are projected to decrease about 15
percent for fiscal 2015 and to be down about 21 percent for the
first quarter compared with year-ago periods. For fiscal 2015, net
income attributable to Deere & Company is anticipated to be
about $1.9 billion.
"Even with a significant decline in sales and a continued
pullback in the global agricultural sector, John Deere expects to
remain solidly profitable in 2015," Allen said. "The company's
earnings forecast reflects the impact of our efforts to establish a
more resilient business model and it represents a level of
performance much better than we've seen in prior downturns."
Longer term, the company's future continues to hold great
promise, Allen said. "Global trends based on population growth and
rising living standards remain intact and are largely unaffected by
periodic swings in the farm economy. At the same time, Deere's
plans for serving a larger global customer base are making good
progress. As a result, we are confident the company is 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 in the years ahead."
Equipment Division Performance
Agriculture & Turf. Sales fell 13 percent for the
quarter and 9 percent for the full year due largely to lower
shipment volumes, the previously announced sales of the company's
landscapes and water operations, and the unfavorable effects of
currency translation. Partially offsetting these factors was price
realization for both the quarter and year.
Operating profit was $682 million
for the quarter and $3.649 billion
for the year, compared with $996
million and $4.680 billion in
2013. Lower results for the quarter were driven primarily by lower
shipment and production volumes, a less favorable product mix,
higher production costs primarily related to engine emission
programs, increased warranty costs and an impairment charge for
China operations. The full-year
decrease was driven mainly by lower shipment and production
volumes, a less favorable product mix, the unfavorable effects of
foreign-currency exchange and higher production costs primarily
related to engine emission programs. Declines for both periods were
partially offset by price realization. As noted, last year also was
affected by impairment charges for the landscapes and water
operations.
Construction & Forestry. Construction and forestry
sales increased 23 percent for the quarter and 12 percent for the
year 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 $228 million
for the quarter and $648 million for
the year, compared with $118 million
and $378 million in 2013. Operating
profit for the quarter improved due to higher shipment volumes and
lower selling, administrative and general expenses. Full-year
results benefited from higher shipment volumes, lower selling,
administrative and general expenses, and price realization,
partially offset by the unfavorable effects of foreign-currency
exchange.
Market Conditions & Outlook
Agriculture & Turf. Deere's worldwide sales of
agriculture and turf equipment are forecast to decrease by about 20
percent for fiscal-year 2015 as a result of weaker conditions in
the global farm economy. Lower commodity prices and falling farm
incomes are putting pressure on demand for agricultural machinery,
especially for larger models. Conditions are more positive in the
U.S. livestock sector, providing support to the sale of smaller
sizes of equipment. Based on these factors, industry sales for
agricultural machinery in the U.S. and Canada are forecast to be down 25 to 30
percent for 2015.
Full-year 2015 industry sales in the EU28 are forecast to be
down about 10 percent due to lower crop prices and farm incomes as
well as potential pressure on the dairy sector. In South America, industry sales of tractors and
combines are projected to be down about 10 percent as a result of
the headwinds affecting agricultural producers. Industry sales in
the Commonwealth of Independent States are expected to deteriorate
further due in part to tight credit conditions. Asian sales are
projected to be down slightly, with most of the decline centered in
China.
Industry sales of turf and utility equipment in the U.S. and
Canada are expected to be flat to
up 5 percent for 2015, benefiting from general economic growth.
Construction & Forestry. Deere's worldwide sales of
construction and forestry equipment are forecast to increase by
about 5 percent for 2015. 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
hold steady with the attractive levels of 2014.
Financial Services. Fiscal-year 2015 net income
attributable to Deere & Company for the financial services
operations is expected to be approximately $610 million. The outlook reflects a decline from
the prior year due primarily to an expected increase in the
provision for credit losses, versus the low level of 2014, and a
less favorable tax rate. These factors are projected to be
partially offset by growth in the credit portfolio and higher 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
$154.2 million for the fourth quarter
and $544.2 million for the full-year
2014, compared with $132.9 million
and $468.5 million for the respective
periods last year. Results for the quarter improved primarily due
to growth in the credit portfolio, partially offset by higher
selling, administrative and general expenses. Results for the
full-year improved due to growth in the portfolio and a more
favorable effective tax rate, partially offset by a higher
provision for credit losses and higher selling, administrative and
general expenses.
Net receivables and leases financed by JDCC were $32.984 billion and $30.594 billion at October
31, 2014 and 2013, 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), 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. 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 response thereto; 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; and 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 in order to meet future cash flow requirements,
to fund operations and costs associated with engaging in
diversified funding activities, and to fund purchases of the
company's products. If general economic conditions
deteriorate 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).
Fourth Quarter 2014
Press Release
|
(in millions of
dollars)
|
Unaudited
|
|
|
Three Months Ended
October 31
|
|
Twelve Months Ended
October 31
|
|
|
|
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf
|
$
|
6,169
|
|
|
$
|
7,102
|
|
|
-13
|
|
$
|
26,380
|
|
|
$
|
29,132
|
|
|
-9
|
Construction and
forestry
|
1,874
|
|
|
1,522
|
|
|
+23
|
|
6,581
|
|
|
5,866
|
|
|
+12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
net sales
|
8,043
|
|
|
8,624
|
|
|
-7
|
|
32,961
|
|
|
34,998
|
|
|
-6
|
Financial services
|
762
|
|
|
699
|
|
|
+9
|
|
2,577
|
|
|
2,349
|
|
|
+10
|
Other revenues
|
160
|
|
|
128
|
|
|
+25
|
|
529
|
|
|
448
|
|
|
+18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales and
revenues
|
$
|
8,965
|
|
|
$
|
9,451
|
|
|
-5
|
|
$
|
36,067
|
|
|
$
|
37,795
|
|
|
-5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf
|
$
|
682
|
|
|
$
|
996
|
|
|
-32
|
|
$
|
3,649
|
|
|
$
|
4,680
|
|
|
-22
|
Construction and
forestry
|
228
|
|
|
118
|
|
|
+93
|
|
648
|
|
|
378
|
|
|
+71
|
Financial services
|
261
|
|
|
241
|
|
|
+8
|
|
921
|
|
|
870
|
|
|
+6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
profit
|
1,171
|
|
|
1,355
|
|
|
-14
|
|
5,218
|
|
|
5,928
|
|
|
-12
|
Reconciling items
**
|
(105)
|
|
|
(111)
|
|
|
-5
|
|
(429)
|
|
|
(445)
|
|
|
-4
|
Income
taxes
|
(417)
|
|
|
(437)
|
|
|
-5
|
|
(1,627)
|
|
|
(1,946)
|
|
|
-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to
Deere
& Company
|
$
|
649
|
|
|
$
|
807
|
|
|
-20
|
|
$
|
3,162
|
|
|
$
|
3,537
|
|
|
-11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
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.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/deere-announces-fourth-quarter-earnings-of-649-million-300001356.html
SOURCE Deere & Company