News Column

Deere & Co. earnings set 1st-quarter mark

February 13, 2014

Jeff Montgomery

Deere & Co. announced record first-quarter earnings Wednesday and predicted a year of solid growth for its construction and forestry division.

For the first quarter ended Jan. 31, the company reported net income of $681.1 million. Income for the quarter was up 5 percent and earnings per share increased by 10 percent compared with the same period last year.

Worldwide net sales increased to $7.6 billion in the first quarter, up 3 percent compared to last year.

Deere noted that the first-quarter report reflected "broad- based" improvement, in which all divisions reported higher income. In its quarterly earnings report, the company attributed the results to solid execution and successful cost management

Construction and forestry sales rose 4 percent for the quarter, signaling good news for the local economy. The construction and forestry division includes John Deere Dubuque Works.

Operating profit in construction and forestry in the quarter grew to $94 million in the first quarter, compared with $71 million a year ago. A news release attributed the jump to factors including lower production costs and decreased research and development expenses.

The outlook for the remainder of fiscal year 2014 is even brighter, with the company forecasting a 10 percent increase in worldwide sales of construction and forestry equipment.

Ken Golden, director of global public relations for Deere & Co., said the first quarter marks the continuation of a positive turnaround.

"The construction equipment industry has been down the last couple of years, and now it is recovering nicely," he said.

The turnaround has been fueled by the economic recovery as well as an increase in housing starts.

"As people build more houses, contractors will upgrade their fleets, invest in their businesses and buy more products. That means equipment sales for Deere," Golden said.

The outlook isn't quite as rosy on a companywide scale.

Despite the strong first quarter, Deere does not expect the year- over-year growth to continue for the remainder of the year.

In the company outlook, Deere predicted decreased sales for the second quarter and the remainder of the fiscal year.

"Company equipment sales are projected to decrease about 3 percent for fiscal 2014 and be down about 6 percent for the second quarter compared with the same period of 2013," the report said.

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Source: Telegraph-Herald (Dubuque, IA)

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