Solid Farm Equipment Sales Boost Deere & Company in Second-Quarter 2013, Agricultural Market to Improve

Researched by Industrial Info Resources (Sugar Land, Texas)--Deere & Company (NYSE:DE) (Moline, Illinois), a leading agricultural, construction and forestry equipment manufacturer, reported steady gains in revenues and profits in the second quarter of the company's fiscal year 2013, as improving conditions in the global farming industry boosted sales for farm machinery. Net income was reported to be $1.08 billion for the quarter, a 2.65% increase from second-quarter 2012.

Total sales and revenues stood at $10.91 billion, a 9.04% increase from the same period last year. Price realization and stronger shipment volumes drove the gains from equipment operations, which stood at $10.27 billion, a 9.14% increase, although production costs and selling, general and administrative expenses also were higher. Most of the price and volume gains were in the Agriculture & Turf segment , where sales increased 12%, which more than offset the 6% decline in the Construction & Forestry segment, where shipment volumes proved to be weaker. Deere also benefited from lower raw material costs.

Industrial Info is tracking $306 million in active projects involving Deere, including the $85 million expansion of a manufacturing plant in Ankeny, Iowa. The project involves constructing a 300,000-square-foot production assembly building, as well as installing new production and supporting equipment, to add capacity for self-propelled sprayers. It is expected to be completed in the first quarter of calendar year 2014.

"John Deere's second quarter was a good one," said Susan Karlix, the manager of investor communications for Deere, in a conference call. "Income and sales both reached new, all-time quarterly highs. It also was our 12th consecutive quarter-over-quarter record."

Deere executives expect the company to show record earnings of $3.3 billion for full-year 2013, while expectations for capital expenditures remain unchanged at about $1.3 billion. Global sales of agriculture and turf equipment are expected to increase about 7% from 2012, as strengthening commodity prices and farm incomes drive demand; in particular, sales for agricultural machinery in the U.S. and Canada is expected to increase 5%, although sales in the European Union are expected to drop by the same amount. Still, executives remain cautious about unfavorable weather in North America that is delaying planting, slowing construction and eroding sales of turf equipment.

Global sales for construction and forestry equipment are expected to decline about 5%, partly a result of the unfavorable weather in North America and collapsing demand in Europe for forestry equipment. All in all, Deere equipment sales are expected to increase 5% globally in full-year 2013 and 3% in the current quarter.

"Driven by strong crop prices, 2012 forecast cash receipts were at a record $402 billion," Karlix said in the conference call. "Cash receipts for 2013 are expected to remain historically strong, and remain the second-highest on record. For the year ahead, crop yields are forecast to be higher than in 2012, and much closer to normal--but prices will be somewhat lower. This reflects recovery from last year's drought conditions. Livestock receipts are forecast to be higher."

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Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.