Agricultural machinery manufacturer John Deere reports significant growth in turnover and net profit for the 2023 financial year. Net profit amounts to $10,16 billion, an increase of an impressive 43% compared to last year. However, the agricultural machinery manufacturer expects lower profits next year due to a more difficult market situation.
The financial year 2022/23 from Deere and Co which ended October 29, amounts to a total turnover of $61,25 billion, approximately €56 billion and 16% more than last year. This breaks both the turnover record and the net profit, just like last year. The fourth quarter contributed to this with a turnover of €14,1 billion, but was 1% lower than in 2022. In the last quarter, net profit increased by 5% to €2,17 billion.
“The fourth quarter and full year results are driven by the successful execution of the Smart Industrial Operating Model and the value customers recognize in its industry-leading products and solutions,” said CEO John C. May. What is also striking when you dig a little deeper into the figures is that turnover in the large machines and precision agricultural technology segment increased by 22% to €24,5 million. Total profit in this segment even increased by 60% to €6,4 million, which is where most of the profit comes from. The company is actually making losses on financial services.
Less demand in 2024
The company is less positive about turnover and profit for the new financial year. That was different last year the order books were almost sufficient for the coming year. They expect a net profit of between €7 and €7,5 billion and attribute this to lower sales of machines and other technology. The reason for this is that lower raw material prices mean that purchasing (agricultural) companies can make fewer investments. This was better last year, which has translated into John Deere's excellent turnover figures.
The decline in sales was already visible in the last quarter. Financial director Joshua Jepsen told Reuters that demand from the sector declined much faster in the second half of 2023 than previously expected. The financial report also shows that net sales for 2024 in the large mechanization and precision agriculture products segment will decline by 15% to 20%. For small mechanization and grass this is 10% to 15%.
Deere & Co's shares fell from $383 to $356 on Wednesday morning, the lowest since June 1, after the release of the annual report and forecast. The stock subsequently recovered and is currently trading at $368,50 per share.
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.
This is in response to it Boerenbusiness article:
[url = https: // www.boerenbusiness.nl/article/10906965/recordprofit-for-john-deere-2024-less-positive]Record profit for John Deere, 2024 less positive[/url]