- Third quarter net sales increased 25%, supported by higher production rates, despite continued supply chain pressures.
- Full-year earnings outlook revised to $7.0-7.2 billion range.
- Strong order books and positive customer fundamentals to drive demand in 2023.
MOLINE, Ill. – Deere & Company reported net income of $1.884 billion for the third quarter ended July 31, 2022, or $6.16 per share, compared to net income of $1.667 billion, or $5.32 per share, for the three months ended August 1, 2021. For the first nine months of the year, net income attributable to Deere & Company was $4.885 billion, or $15.88 per share, compared to $4.680 billion , or $14.86 per share, for the same period last year.
Net sales and revenue increased 22% to $14.102 billion for the third quarter of 2022 and 13% to $37.041 billion for nine months. Net sales were $13.000 billion for the quarter and $33.565 billion for nine months, compared to $10.413 billion and $29.461 billion last year.
“We are proud of the extraordinary efforts of our employees to increase plant production and deliver products to customers under difficult circumstances,” said John C. May, President and Chief Executive Officer. “At the same time, our results reflected higher costs and production inefficiencies due to the difficult supply chain situation.”
Company outlook and summary
Net income attributable to Deere & Company for fiscal 2022 is expected to be in the range of $7.0 billion to $7.2 billion.
“Looking forward, we believe favorable conditions will continue into 2023 based on the strong response we’ve seen to early ordering programs,” May said. “We are working closely with our factories and suppliers to meet higher levels of customer demand next year. Additionally, we are confident that the company’s smart industrial strategy and leap forward ambitions will continue to unlock new value for customers through Deere’s advanced technologies and solutions.
Like most manufacturers, Deere has struggled to secure parts and raw materials, stalling equipment production and resulting in a missed sales target in the second quarter of 2022. according to Reuters. Ken Wagner, owner of the Deere Heritage Tractor dealership, says he’s seen a number of machine orders canceled because Deere couldn’t produce them.
“Some of the products will not be produced in the quantities we want,” says Wagner.
Deere company executives told shareholders the supply chain disruptions will last all year.
Production & Precision Agriculture
Production and Precision Agriculture sales increased in the quarter due to higher shipment volumes and price realization, partially offset by the unfavorable impact of foreign currency translation. Operating profit increased primarily due to price realization and increased shipment volumes and sales mix. These items were partially offset by higher production costs, higher selling, administrative and general expenses, higher research and development expenses and unfavorable exchange rate effects.
Eric Greaser, senior analyst at Moody’s, told Reuters that analysts forecast a 36% year-on-year increase in revenue for Deere’s precision agriculture segment, indicating that Deere’s bet on precision is paying off.
“The pricing has been fantastic, and it can generate very strong revenue for Deere,” Greaser says.
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