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Deere reports loss on charges, lower sales

November 27, 2009, Champaign, IL – Deere and Co. reported a $223
million (US) loss for the fourth quarter as big charges and a 28 per
cent decline in sales of farm and construction equipment as demand
slumped amid the global economic downturn.

November 27, 2009, Champaign, IL – Deere and Co. reported a $223 million (US) loss for the fourth quarter as big charges and a 28 per cent decline in sales of farm and construction equipment as demand slumped amid the global economic downturn.

Deere is the biggest U.S. maker of farm equipment, and sluggish economic conditions in the United States and much of the rest of the world continue to drive down demand for tractors, combines and the company’s other agricultural mainstays. Prices of major crops such as corn and soybeans show no sign of rebounding to anything like the highs of the past couple of years, many farmers bought new equipment.

Deere’s construction equipment business has also been hurt by the sluggish global economy and slowdown in home and commercial construction.

Nonetheless, the company based in Moline, IL, said it would have been profitable without the unusual items in the latest quarter.

Deere said it expects its equipment sales to drop another one per cent next year, including a 10 per cent slide in the first quarter. The company forecasts a $900 million profit next year.

Its shares fell 90 cents, or 1.7 per cent, to $51.39 in premarket trading.

The company lost 53 cents a share in the three months ended Oct. 31 in contrast to a profit of $345 million, or 81 cents a share, a year earlier.

The loss included charges of $321.8 million for a write-down in the value of assets and restructuring expenses, including the cost of laying off hundreds of workers earlier this year. Otherwise, Deere said it would have earned 23 cents per share.

Analysts were looking for earnings of 3 cents a share before items.

Worldwide revenue dropped to $5.334 billion from $7.4 billion a year ago.

Sales of farm and construction equipment dropped 26 per cent in the U.S. and Canada and 35 per cent in the rest of the world. Deere’s equipment operations reported an operating loss of $22 million for the quarter, down from a profit of $549 million a year earlier.

The company noted, however, that its costs for raw materials dropped during the quarter, helping its results. High raw materials costs have been a drag on the results of many heavy equipment makers through the economic downturn.

In its earnings release, Deere said it expects farmers to remain cautious about new equipment purchases because of the economy.

For the year, Deere reported a profit of $873.5 million, or $2.06 per share, down from $2.05 billion, or $4.70 per share, a year earlier.

“In the face of intense global economic pressure, John Deere has completed a solidly profitable year and maintained its strong financial condition,” said Samuel Allen, president and chief executive officer. He took over at the beginning of the quarter for
Robert Lane.