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19/02/2009 03:07:09
United States-John Deere tractors sales back 20%.
UNITED STATES-TRACTOR SALES DOWN.
Deere Slashes 2009 Profit Estimate By 20%
Deere & Co. (DE) slashed its 2009 profit forecast by more than 20% Wednesday as demand for its farm and construction equipment grows weaker in the ongoing recession.
Deere, the world’s largest producer of farm equipment by revenue, ratcheted down sales expectations across all its product lines and geographic markets.
Deere’s performance is widely watched as a barometer of conditions in global agriculture. For the past five years, Deere’s sales and profits have surged amid rising prices for farm commodities and livestock.
But falling commodity prices, tighter credit conditions, higher material costs and volatile currency exchange rates are putting the brakes on the Moline, Ill., company’s performance.
Deere now sees its 2009 fiscal-year net income at $1.5 billion, 21% below its November estimate of $1.9 billion. The company expects sales to fall by 8% from 2008, compared with flat equipment sales seen earlier.
Analysts’ surveyed by Thomson Reuters estimated net income at $1.77 billion.
Second-quarter equipment sales are expected to slip about 9%. The company said it will refrain from offering quarterly income guidance because of uncertainty in its markets and fluctuating currency exchange rates.
The downward revisions were widely anticipated by company observers after rivals CNH Global N.V. (CNH) and Agco Corp. (AG) significantly lowered their expectations for 2009 in recent earnings releases.
Deere expects worldwide sales of its farm machinery this year to fall by 2% from 2008, compared with the company’s earlier prediction of a 5% increase.
The company sees North America as its strongest market for farm machinery, predicting that retail sales will be flat to up by as much as 5% over 2008. Sales of large tractors and combines are expected to be a pocket of strength as commodity prices remain healthy and fuel and fertilizer costs moderate.
Elsewhere, however, Deere widened its previous 2009 forecasts for declining sales. Deere now expects South American sales to fall by 15% to 20%, under pressure from drought conditions and tougher credit conditions for equipment purchases. Sales in Western Europe are seen slipping by 10% to 15%.
The company also predicted that 2009 sales of its construction and forestry equipment will be down 24% from 2008 on the continued slump in U.S. housing construction.
Sales of commercial and consumer equipment, which includes Deere’s irrigation and landscaping businesses, are expected to fall 14%.
For the fiscal first quarter, Deere posted income of $203.9 million, or 48 cents a share, down 45% from $369.1 million, or 83 cents, a year earlier, well below the company’s November forecast of $275 million. Net sales in the quarter fell 1.1% to $5.15 billion as equipment sales rose 0.6% to $4.56 billion. Analysts on average expected earnings of 63 cents a share on equipment sales of $4.64 billion.
Deere attributed the lower first-quarter income to higher material costs, a stronger U.S. dollar versus other currencies and higher-than-expected order cancellations in South America and parts of Europe.
Deere Slashes 2009 Profit Estimate By 20%
Deere & Co. (DE) slashed its 2009 profit forecast by more than 20% Wednesday as demand for its farm and construction equipment grows weaker in the ongoing recession.
Deere, the world’s largest producer of farm equipment by revenue, ratcheted down sales expectations across all its product lines and geographic markets.
Deere’s performance is widely watched as a barometer of conditions in global agriculture. For the past five years, Deere’s sales and profits have surged amid rising prices for farm commodities and livestock.
But falling commodity prices, tighter credit conditions, higher material costs and volatile currency exchange rates are putting the brakes on the Moline, Ill., company’s performance.
Deere now sees its 2009 fiscal-year net income at $1.5 billion, 21% below its November estimate of $1.9 billion. The company expects sales to fall by 8% from 2008, compared with flat equipment sales seen earlier.
Analysts’ surveyed by Thomson Reuters estimated net income at $1.77 billion.
Second-quarter equipment sales are expected to slip about 9%. The company said it will refrain from offering quarterly income guidance because of uncertainty in its markets and fluctuating currency exchange rates.
The downward revisions were widely anticipated by company observers after rivals CNH Global N.V. (CNH) and Agco Corp. (AG) significantly lowered their expectations for 2009 in recent earnings releases.
Deere expects worldwide sales of its farm machinery this year to fall by 2% from 2008, compared with the company’s earlier prediction of a 5% increase.
The company sees North America as its strongest market for farm machinery, predicting that retail sales will be flat to up by as much as 5% over 2008. Sales of large tractors and combines are expected to be a pocket of strength as commodity prices remain healthy and fuel and fertilizer costs moderate.
Elsewhere, however, Deere widened its previous 2009 forecasts for declining sales. Deere now expects South American sales to fall by 15% to 20%, under pressure from drought conditions and tougher credit conditions for equipment purchases. Sales in Western Europe are seen slipping by 10% to 15%.
The company also predicted that 2009 sales of its construction and forestry equipment will be down 24% from 2008 on the continued slump in U.S. housing construction.
Sales of commercial and consumer equipment, which includes Deere’s irrigation and landscaping businesses, are expected to fall 14%.
For the fiscal first quarter, Deere posted income of $203.9 million, or 48 cents a share, down 45% from $369.1 million, or 83 cents, a year earlier, well below the company’s November forecast of $275 million. Net sales in the quarter fell 1.1% to $5.15 billion as equipment sales rose 0.6% to $4.56 billion. Analysts on average expected earnings of 63 cents a share on equipment sales of $4.64 billion.
Deere attributed the lower first-quarter income to higher material costs, a stronger U.S. dollar versus other currencies and higher-than-expected order cancellations in South America and parts of Europe.
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