Deere Lifts Sales Outlook for Year -- WSJ
21 February 2018 - 7:55AM
Dow Jones News
By Bob Tita
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 17, 2018).
Deere & Co. raised sales forecasts for its farm and
construction equipment this year, even as supply and delivery
bottlenecks crimped quarterly sales.
The machinery maker on Friday reported a fiscal first-quarter
loss on charges tied to the new federal tax code and
lower-than-expected equipment sales.
But Deere said prospects are good for its farm and construction
machinery.
"Deere has continued to experience strong increases in demand
for its products as conditions in key markets show further
improvement," Chief Executive Sam Allen said.
Deere's stock rose 1.6% to $169.44.
Despite another bumper harvest last year that weighed on crop
prices and farmers' incomes, a pick up in sales of high-horsepower
equipment shows that some farmers are buying again.
The company on Friday said it has encountered difficulties
accelerating production from the low volumes of recent years.
"We are working with our suppliers and logistics providers as
they adjust to the present conditions," said Chief Financial
Officer Rajesh Kalathur. "It takes time for them to actually put
the people in place and get them trained and have them
working."
Sales of Deere's green-and-yellow farm and landscaping machinery
rose 18% to $4.2 billion in quarter that ended Jan. 28, while
profit from the business soared 78% to $387 million.
Deere expects its world-wide farm equipment sales to increase
15% this year, up from a 9% increase anticipated in November.
The Moline, Ill.-based company expects overall sales of farm and
construction equipment will rise 29% in the fiscal year ending in
October, up from a 22% forecast giving late last year.
The sales growth is being aided by the addition of German
road-paving-equipment manufacturer Wirtgen Group, which Deere
bought last year for $5 billion.
The Wirtgen acquisition is expected to add 56% to sales in
Deere's construction unit this year, expanding the unit's reach
beyond North America and helping offset sales in the cyclical
farming business.
Deere's construction-machinery business continued to benefit
from resurgent demand in North America.
Deere booked $965 million in charges related to the new federal
tax legislation. The charges stem from the write-down of the value
of Deere's net deferred tax assets and the repatriation of
previously untaxed earnings held overseas.
Overall for its first quarter, Deere reported a loss of $535.1
million, or $1.66 a share, compared with $193.8 million profit, or
61 cents a share, a year earlier.
Excluding the tax charges, the company earned $1.31 a share.
Analysts expected $1.20 a share.
Quarterly equipment sales rose 27% to $6 billion, though
analysts' were expecting $6.42 billion.
Corrections & Amplifications An earlier version of this
article incorrectly stated the charges related to the new federal
tax legislation. Deere's charges totaled $965 million for the
reduced value of net deferred tax assets and the repatriation of
previously untaxed earnings held outside of the U.S. (Feb. 19,
2018)
Austen Hufford contributed to this article
Write to Bob Tita at robert.tita@wsj.com
(END) Dow Jones Newswires
February 20, 2018 15:40 ET (20:40 GMT)
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