Result John Deere exceeds all expectations

John Deere expects net sales in fiscal 2018, which runs from October through September, to increase 19% to $35,39 billion. That is much higher than analyst expectations. The sale of construction and forestry machines in particular is going well.

In the last quarter of 2017, John Deere shows excellent results. Sales in the United States (US) and Canada increased by 23%, while sales in other markets increased by 30%. On balance, fourth quarter revenue grew 25,5% to $7,09 billion. Net worth was $510,3 million, an increase of 79% over the same period in 2016.

The machine manufacturer foresees a continuation of the line deployed in 2018. Net profit is estimated at $2,6 billion, significantly ahead of the $2,3 billion analysts are forecasting. By the way, that's no surprise. John Deere's results have exceeded analysts' expectations for 5 consecutive quarters.

Home market is a bit disappointing  
The company derives approximately 70% of its turnover from the sale of agricultural machinery. About 60% of this is realized in North America. Due to the disappointing grain prices in recent years, sales in this area are disappointing. According to CEO, Samuel Allen, sales of agricultural machinery in South America in particular are on the rise. John Deere expects tractor and combines sales in this market to grow by approximately 2018% in 5.

The expected profit comes mainly from construction and forestry machinery. In the fourth quarter of 2017, turnover already increased by 37%. John Deere forecasts a 2018% increase in sales for 67, thanks to the improving economy in the world. The turnover is partly driven by the announced acquisition of Wirtgen Group. This deal is expected to close in December.

The stock of Deere & Company, the parent company of John Deere, is benefiting from the good forecasts. For example, the price rose by more than 4% on Wednesday to the highest level ever: $145.25.

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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