May 26, 2009, Pittsburgh, Penn –
Deere & Co. reported a 38 per cent drop in quarterly profit
recently as tight credit and lower crop prices cut overseas.
May 26, 2009, Pittsburgh, Penn – Deere & Co. reported a 38 per cent drop in quarterly profit recently as tight credit and lower crop prices cut overseas.
The world’s largest farm equipment maker also slashed its 2009 profit outlook by 27 per cent, the second time this year that Deere has cut its annual forecast, citing uncertain market conditions.
Farmers have become more cautious about spending on new equipment as crop prices, which drive machinery sales, have tumbled from historic highs last year. The costs of fertilizer and fuel, meanwhile, remain relatively high. And the global credit crunch has made it more difficult to get loans.
Deere lowered its projected 2009 net income to $1.1 billion, down from $1.5 billion forecast earlier. Deere said the outlook for the remainder of the year “remains highly uncertain.”
The company said overall equipment sales plunged 30 per cent outside North America. Deere has been trying to expand globally and sold more than half its agricultural equipment outside the region for the first time last year.
Equipment sales dipped eight per cent in the United States and Canada, its largest market.
Sales of tractors, combines and other farm equipment – Deere’s biggest source of revenue – fell four per cent due to currency exchange fluctuations and lower shipments. Those sales are often driven by prices of corn, wheat and other crops, which have fallen from record levels last year.
To cope with the weaker demand, Deere has laid off more than 1,000 workers this year, though it recalled 68 workers last month.
It also combined its agriculture equipment division with its commercial and consumer business to cut costs and streamline operations.
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