Net income attributable to Deere & Company was $1.056 billion for the second quarter ended April 30, compared with $904.3 million for the same period last year. For the first six months of the year, net income attributable to Deere & Company was $1.589 billion compared with $1.418 billion.
Worldwide net sales and revenues increased 12 percent, to $10.009 billion, for the second quarter and rose 12 percent to $16.775 billion for six months. Net sales of the equipment operations were $9.405 billion for the quarter and $15.524 billion for six months, compared with $8.328 billion and $13.841 billion for the same periods last year.
"John Deere is well on its way to a year of outstanding performance after reporting an eighth consecutive quarter of record earnings," said Samuel R. Allen, chairman and chief executive officer. "Our results are a reflection of positive conditions in the global farm economy, which is continuing to show impressive strength and endurance. Deere is gaining new customers throughout the world, who are responding with great enthusiasm to our innovative lines of equipment."
Net sales of the worldwide equipment operations increased 13 percent for the quarter and 12 percent for six months compared with the same periods a year ago. Sales included price realization of 5 percent for the quarter and 4 percent year to date and an unfavorable currency-translation effect of 2 percent for the quarter and 1 percent for six months.
Equipment net sales in the United States and Canada increased 18 percent for the quarter and 13 percent year to date. Outside the U.S. and Canada, net sales increased 6 percent for the quarter and 12 percent for six months, with unfavorable currency-translation effects of 4 percent and 3 percent for these periods.
Financial services reported net income attributable to Deere & Company of $109.2 million for the quarter and $228.3 million for six months compared with $105.1 million and $223.3 million last year. Results were higher for the quarter primarily due to growth in the credit portfolio, partially offset by increased selling, administrative and general expenses. Six-month results benefited from growth in the credit portfolio, revenue from wind energy credits and a lower provision for credit losses. These factors were partially offset by increased selling, administrative and general expenses, higher crop insurance claims and narrower financing spreads.
Market Conditions & Outlook
Agriculture & Turf - Deere's worldwide sales of agriculture and turf equipment are forecast to increase by about 15 percent for full-year 2012, including a negative currency-translation impact of about 3 percent. Industry farm-machinery sales in the U.S. and Canada are forecast to rise by more than 10 percent in 2012. Overall conditions remain positive and demand continues to be strong, especially for high-horsepower equipment.
Construction & Forestry - Deere's worldwide sales of construction and forestry equipment are forecast to increase by about 20 percent for 2012. The gain reflects further strength in the rental, energy, material-handling, industrial, and international sectors. Of particular note, the company is benefiting from growth in sales to independent rental companies, which are upgrading and replenishing their fleets. Further, Deere's sales are being supported by a range of advanced new products and by geographic expansion. After considerable growth in 2011, world forestry markets are projected to be about the same for 2012. Weakness in Europe is being offset by improvement in other international markets.
Company Outlook & Summary
Company equipment sales are projected to increase by about 15 percent for fiscal 2012 and by about 25 percent for the third quarter compared with the same periods a year ago. Included is an unfavorable currency-translation impact of about 3 percent for the year and 4 percent for the third quarter. For the full year, net income attributable to Deere & Company is anticipated to be about $3.350 billion.
According to Allen, promising fundamentals are lending strong support to the company's plans for increased sales and profitability. "Our extensive investments in new products and additional global capacity are moving ahead at an accelerated rate," he said, pointing out there are more than a dozen major projects under way throughout the world, including seven new factories. "These investments are essential to the success of our longer-term growth objectives, which we believe are firmly on track. They also put Deere in a sound position to respond to a rising global need for food, shelter, and infrastructure in the years ahead. In our view, these powerful trends have considerable staying power and should prove highly rewarding to our customers and investors."
Equipment Division Performance
Agriculture & Turf - Sales increased 11 percent for the quarter and 10 percent for six months largely due to higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation.
Construction & Forestry - Construction and forestry sales increased 26 percent for the quarter and 24 percent for six months mainly due to higher shipment volumes and price realization. Operating profit was $119 million for the quarter and $243 million for six months, compared with $105 million and $194 million last year. Results improved in both periods primarily due to price realization and higher shipment volumes, partially offset by increased raw-material costs and an unfavorable product mix. Also affecting the performance of both periods were higher research and development and selling, administrative and general expenses, as well as increased costs related to engine emissions requirements.