MOLINE, Ill., Nov. 21, 2012 /PRNewswire/ -- Net income
attributable to Deere & Company (NYSE: DE) was
$687.6 million, or $1.75 per share, for the fourth quarter ended
October 31, compared with
$669.6 million, or $1.62 per share, for the same period last
year.
For fiscal 2012, net income attributable to Deere & Company
was $3.065 billion, or $7.63 per share, compared with $2.800 billion, or $6.63 per share, in 2011.
Worldwide net sales and revenues rose 14 percent, to
$9.792 billion, for the fourth
quarter and increased 13 percent to $36.157
billion for the full year. Net sales of the equipment
operations were $9.047 billion for
the quarter and $33.501 billion for
the year, compared with $7.903
billion and $29.466 billion
for the same periods in 2011.
"In the face of continuing global economic pressure, John Deere
has completed another record year," said Samuel R. Allen, chairman and chief executive
officer. "Our success reflects positive customer response to our
lines of innovative equipment coupled with extensive efforts to
expand our global competitive position."
During the year, Deere continued with the record introduction of
new products, while opening or moving ahead with new factories in
China, India, and Brazil. In the U.S., the company announced
capacity expansions for tractors, sprayers, and cylinders. "John
Deere's performance illustrates the continuing impact of our
operating model, which stresses a disciplined approach to cost and
asset management," Allen said. "As a result, we are achieving
strong financial results and generating high levels of cash flow.
These dollars are funding growth activities throughout the world
and providing value directly to investors."
Summary of Operations
Net sales of the worldwide equipment operations increased 14
percent for the fourth quarter and full year compared with the same
periods in 2011. Sales included price realization of 4 percent and
an unfavorable currency-translation effect of 3 percent for both
periods. Equipment net sales in the
United States and Canada
increased 26 percent for the quarter and 20 percent for the year.
Outside the U.S. and Canada, net
sales decreased 2 percent for the quarter and increased 5 percent
for the year, with unfavorable currency-translation effects of 7
percent and 6 percent for these periods.
Deere's equipment operations reported operating profit of
$1.051 billion for the quarter and
$4.397 billion for the full year,
compared with $955 million and
$3.839 billion for the same periods
in 2011. The improvement in the quarter was primarily due to the
impact of higher shipment volumes and price realization. These
factors were partially offset by higher production costs and
increased selling, administrative and general, and research and
development expenses. Also affecting results was a goodwill
impairment charge related to the company's John Deere Water
reporting unit and unfavorable effects of foreign currency
exchange.
Full-year results improved primarily due to the impact of price
realization and higher shipment volumes. Partially offsetting these
factors were higher production and raw-material costs, unfavorable
effects of foreign currency exchange, and increased research and
development, and selling, administrative and general expenses. The
increase in production costs for both periods was primarily related
to new products, engine-emission requirements and incentive
compensation expenses.
Net income of the company's equipment operations was
$576 million for the fourth quarter
and $2.616 billion for the full year,
compared with $552 million and
$2.329 billion in 2011. The same
operating factors mentioned above, along with a higher effective
tax rate and increased interest expense, affected both quarterly
and annual results.
Financial services reported net income attributable to Deere
& Company of $121.7 million for
the quarter and $460.3 million for
the year compared with $122.1 million
and $471.0 million in 2011. Results
were slightly lower for the quarter primarily due to higher
reserves for crop insurance claims, increased selling,
administrative and general expenses, a higher provision for credit
losses and narrower financing spreads. These factors were almost
entirely offset by growth in the credit portfolio. Fiscal-year 2012
results were lower primarily due to increased selling,
administrative and general expenses, higher reserves for crop
insurance claims and narrower financing spreads, partially offset
by growth in the credit portfolio and a lower provision for credit
losses.
Company Outlook & Summary
Company equipment sales are projected to increase by about 5
percent for full year 2013 and to be up about 10 percent for the
first quarter compared with the same periods of 2012. For fiscal
2013, net income attributable to Deere & Company is anticipated
to be about $3.2 billion.
"Deere remains well-positioned to carry out its growth plans and
capitalize on positive long-term trends, even though present global
economic and fiscal concerns warrant continued caution," Allen
said. "With support from a highly committed group of employees,
dealers and suppliers, our plans for helping meet the world's
growing need for food and infrastructure are moving ahead and
achieving a good deal of success.
"We are proud of the company's performance in 2012 and look
forward to building on these gains in 2013 and beyond. Despite
fragile economic conditions in many regions, we have great
confidence in the company's prospects and in our ability to deliver
value to investors and other stakeholders in the future."
Equipment Division Performance
Agriculture & Turf. Sales increased 16 percent for
the quarter and 13 percent for the year largely due to higher
shipment volumes and price realization, partially offset by the
unfavorable effects of currency translation.
Operating profit was $931 million
for the quarter and $3.921 billion
for the year, compared with $868
million and $3.447 billion,
respectively, in 2011. The improvement in both periods was
primarily due to the impact of higher shipment volumes and price
realization. Results in the quarter were partially offset by higher
production costs and increased selling, administrative and general,
and research and development expenses. Also affecting
fourth-quarter performance was a goodwill impairment charge and
unfavorable effects of foreign currency exchange. For the full
year, results were partially offset by higher production and
raw-material costs, unfavorable effects of foreign currency
exchange, and increased research and development, and selling,
administrative and general expenses.
Construction & Forestry. Construction and forestry
sales increased 7 percent for the quarter and 19 percent for the
year mainly due to higher shipment volumes and price realization.
Operating profit was $120 million for
the quarter and $476 million for the
year, compared with $87 million and
$392 million, respectively, in 2011.
Results increased for both periods primarily due to the impact of
price realization and higher shipment volumes. These factors were
partially offset by increased production costs and higher selling,
administrative and general expenses. In addition, higher
raw-material costs and increased research and development expenses
affected the year.
Market Conditions & Outlook
Agriculture & Turf. Deere's worldwide sales of
agriculture and turf equipment are forecast to increase by about 4
percent for fiscal year 2013. Relatively high commodity prices and
strong farm incomes are expected to continue supporting a favorable
level of demand for farm machinery during the year. Deere's sales
are expected to benefit from global expansion and lines of advanced
new equipment.
Industry sales for agricultural machinery in the U.S. and
Canada are forecast to be about
flat for 2013 in relation to the prior year's healthy levels.
Caution around the U.S. livestock and dairy sectors is expected to
offset continued strength in demand for large equipment such as
high-horsepower tractors.
Full-year industry sales in the EU27 are forecast to be flat to
down 5 percent due to continuing deterioration in the overall
economy and a poor harvest in the U.K. Sales in the Commonwealth of
Independent States are expected to be modestly higher in 2013.
In South America, industry
sales are projected to be up about 10 percent as a result of
favorable commodity prices and higher planting intentions. Industry
sales in Asia are projected to be
little-changed from 2012 due to softer economic conditions in
India and China.
U.S. and Canada industry sales
of turf and utility equipment are expected to be up about 5 percent
for 2013, reflecting some improvement in the U.S. economy. Deere's
sales are expected to increase more than the industry due to the
impact of new products.
Construction & Forestry. Deere's worldwide sales of
construction and forestry equipment are forecast to increase by
about 8 percent for fiscal 2013 due in part to modest improvement
in U.S. economic conditions. Sales in world forestry markets are
projected to be about flat for the year as further weakness in
European markets offsets stronger demand in the U.S.
Financial Services. Fiscal-year 2013 net income
attributable to Deere & Company for the financial services
operations is expected to be approximately $500 million. The forecast improvement is
primarily due to expected growth in the credit portfolio and lower
crop insurance claims. These factors are projected to be partially
offset by an increase in the provision for credit losses, which is
anticipated to return to a more typical level.
John Deere Capital Corporation
The following is disclosed on behalf of the company's financial
services subsidiary, John Deere Capital Corporation (JDCC), in
connection with the disclosure requirements applicable to its
periodic issuance of debt securities in the public market.
Net income attributable to John Deere Capital Corporation was
$112.6 million for the fourth quarter
and $382.7 million for full-year
2012, compared with $93.5 million and
$363.6 million for the respective
periods in 2011. The quarter's improvement was mainly due to growth
in the credit portfolio, partially offset by an increased provision
for credit losses and higher selling, administrative and general
expenses. Full-year 2012 results were higher primarily due to
growth in the credit portfolio and a lower provision for credit
losses, partially offset by higher selling, administrative and
general expenses and narrower financing spreads.
Net receivables and leases financed by JDCC were $26.509 billion and $23.184 billion at October
31, 2012 and 2011, respectively.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: Statements under "Company Outlook
& Summary," "Market Conditions & Outlook," and other
forward-looking statements herein that relate to future events,
expectations, trends and operating periods involve certain factors
that are subject to change, and important risks and uncertainties
that could cause actual results to differ materially. Some of
these risks and uncertainties could affect particular lines of
business, while others could affect all of the company's
businesses.
The company's agricultural equipment business is subject to a
number of uncertainties including the many interrelated factors
that affect farmers' confidence. These factors include
worldwide economic conditions, demand for agricultural products,
world grain stocks, weather conditions (including its effects on
timely planting and harvesting), soil conditions (including low
subsoil moisture from recent drought conditions), harvest yields,
prices for commodities and livestock, crop and livestock production
expenses, availability of transport for crops, the growth of
non-food uses for some crops (including ethanol and biodiesel
production), real estate values, available acreage for farming, the
land ownership policies of various governments, changes in
government farm programs and policies (including those in
Argentina, Brazil, China, the European Union, India, Russia
and the U.S.), international reaction to such programs, changes in
and effects of crop insurance programs, global trade agreements,
animal diseases and their effects on poultry, beef and pork
consumption and prices, crop pests and diseases, and the level of
farm product exports (including concerns about genetically modified
organisms).
Factors affecting the outlook for the company's turf and utility
equipment include general economic conditions, consumer confidence,
weather conditions, customer profitability, consumer borrowing
patterns, consumer purchasing preferences, housing starts,
infrastructure investment, spending by municipalities and golf
courses, and consumable input costs.
General economic conditions, consumer spending patterns, real
estate and housing prices, the number of housing starts and
interest rates are especially important to sales of the company's
construction and forestry equipment. The levels of public and
non-residential construction also impact the results of the
company's construction and forestry segment. Prices for pulp,
paper, lumber and structural panels are important to sales of
forestry equipment.
All of the company's businesses and its reported results are
affected by general economic conditions in the global markets in
which the company operates, especially material changes in economic
activity in these markets; customer confidence in general economic
conditions; foreign currency exchange rates and their volatility,
especially fluctuations in the value of the U.S. dollar; interest
rates; and inflation and deflation rates. General economic
conditions can affect demand for the company's equipment as
well. Uncertainty about and actual government spending and
taxing could adversely affect the economy, employment, consumer and
corporate spending, and company results.
Customer and company operations and results could be affected by
changes in weather patterns (including the effects of drought
conditions in parts of the U.S. and dryer than normal conditions in
certain other markets); the political and social stability of the
global markets in which the company operates; the effects of, or
response to, terrorism and security threats; wars and other
conflicts and the threat thereof; and the spread of major
epidemics.
Significant changes in market liquidity conditions and any
failure to comply with financial covenants in credit agreements
could impact access to funding and funding costs, which could
reduce the company's earnings and cash flows. Financial
market conditions could also negatively impact customer access to
capital for purchases of the company's products and customer
confidence and purchase decisions; borrowing and repayment
practices; and the number and size of customer loan delinquencies
and defaults. The sovereign debt crisis, in Europe or elsewhere, could negatively impact
currencies, global financial markets, social and political
stability, funding sources and costs, asset and obligation values,
customers, suppliers, and company operations and results.
State debt crises also could negatively impact customers,
suppliers, demand for equipment, and company operations and
results. The company's investment management activities could
be impaired by changes in the equity and bond markets, which would
negatively affect earnings.
Additional factors that could materially affect the company's
operations, access to capital, expenses and results include changes
in and the impact of governmental trade, banking, monetary and
fiscal policies, including financial regulatory reform and its
effects on the consumer finance industry, derivatives, funding
costs and other areas, and governmental programs, policies and
tariffs in particular jurisdictions or for the benefit of certain
industries or sectors (including protectionist and expropriation
policies and trade and licensing restrictions that could disrupt
international commerce); actions by the U.S. Federal Reserve Board
and other central banks; actions by the U.S. Securities and
Exchange Commission (SEC), the U.S. Commodity Futures Trading
Commission and other financial regulators; actions by
environmental, health and safety regulatory agencies, including
those related to engine emissions (in particular Interim Tier 4,
Final Tier 4 and Stage IIIb non-road diesel emission requirements),
carbon and other greenhouse gas emissions, noise and the risk of
climate change; changes in labor regulations; changes to accounting
standards; changes in tax rates, estimates, and regulations;
compliance with U.S. and foreign laws when expanding to new
markets; and actions by other regulatory bodies including changes
in laws and regulations affecting the sectors in which the company
operates. Customer and company operations and results also
could be affected by changes to GPS radio frequency bands or their
permitted uses.
Other factors that could materially affect results include
production, design and technological innovations and difficulties,
including capacity and supply constraints and prices; the
availability and prices of strategically sourced materials,
components and whole goods; delays or disruptions in the company's
supply chain or the loss of liquidity by suppliers; the failure of
suppliers to comply with laws, regulations and company policy
pertaining to employment, human rights, health, safety, the
environment and other ethical business practices; start-up of new
plants and new products; the success of new product initiatives and
customer acceptance of new products; changes in customer product
preferences and sales mix whether as a result of changes in
equipment design to meet government regulations or for other
reasons; gaps or limitations in rural broadband coverage, capacity
and speed needed to support technology solutions; oil and energy
prices and supplies; the availability and cost of freight; actions
of competitors in the various industries in which the company
competes, particularly price discounting; dealer practices
especially as to levels of new and used field inventories; labor
relations; acquisitions and divestitures of businesses, the
integration of new businesses; the implementation of organizational
changes; difficulties related to the conversion and implementation
of enterprise resource planning systems that disrupt business,
negatively impact supply or distribution relationships or create
higher than expected costs; security breaches and other disruptions
to the company's information technology infrastructure; changes in
company declared dividends and common stock issuances and
repurchases.
Company results are also affected by changes in the level and
funding of employee retirement benefits, changes in market values
of investment assets and the level of interest rates, which impact
retirement benefit costs, and significant changes in health care
costs including those which may result from governmental
action.
The liquidity and ongoing profitability of John Deere Capital
Corporation and other credit subsidiaries depend largely on timely
access to capital to meet future cash flow requirements and fund
operations and the costs associated with engaging in diversified
funding activities and to fund purchases of the company's
products. If market uncertainty increases and general
economic conditions worsen, funding could be unavailable or
insufficient. Additionally, customer confidence levels may
result in declines in credit applications and increases in
delinquencies and default rates, which could materially impact
write-offs and provisions for credit losses. The failure of
reinsurers of the company's insurance business also could
materially affect results.
The company's outlook is based upon assumptions relating to the
factors described above, which are sometimes based upon estimates
and data prepared by government agencies. Such estimates and
data are often revised. The company, except as required by
law, undertakes no obligation to update or revise its outlook,
whether as a result of new developments or otherwise. Further
information concerning the company and its businesses, including
factors that potentially could materially affect the company's
financial results, is included in the company's other filings with
the SEC (including, but not limited to, the factors discussed in
Item 1A. Risk Factors of the company's most recent annual report on
Form 10-K and quarterly reports on Form 10-Q).
Fourth
Quarter 2012 Press Release
|
(in
millions of dollars)
|
Unaudited
|
|
|
Three
Months Ended October 31
|
|
Twelve
Months Ended October 31
|
|
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
%
Change
|
|
|
2012
|
|
|
|
2011
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
and revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf
|
$
|
7,393
|
|
|
$
|
6,354
|
|
|
+16
|
|
$
|
27,123
|
|
|
$
|
24,094
|
|
|
+13
|
Construction and
forestry
|
1,654
|
|
|
1,549
|
|
|
+7
|
|
6,378
|
|
|
5,372
|
|
|
+19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
net sales
|
9,047
|
|
|
7,903
|
|
|
+14
|
|
33,501
|
|
|
29,466
|
|
|
+14
|
Financial services
|
633
|
|
|
615
|
|
|
+3
|
|
2,235
|
|
|
2,163
|
|
|
+3
|
Other revenues
|
112
|
|
|
94
|
|
|
+19
|
|
421
|
|
|
384
|
|
|
+10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales and
revenues
|
$
|
9,792
|
|
|
$
|
8,612
|
|
|
+14
|
|
$
|
36,157
|
|
|
$
|
32,013
|
|
|
+13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit: *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf
|
$
|
931
|
|
|
$
|
868
|
|
|
+7
|
|
$
|
3,921
|
|
|
$
|
3,447
|
|
|
+14
|
Construction and
forestry
|
120
|
|
|
87
|
|
|
+38
|
|
476
|
|
|
392
|
|
|
+21
|
Financial services
|
191
|
|
|
196
|
|
|
-3
|
|
712
|
|
|
725
|
|
|
-2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
profit
|
1,242
|
|
|
1,151
|
|
|
+8
|
|
5,109
|
|
|
4,564
|
|
|
+12
|
Reconciling items **
|
(129)
|
|
|
(98)
|
|
|
+32
|
|
(385)
|
|
|
(340)
|
|
|
+13
|
Income
taxes
|
(425)
|
|
|
(383)
|
|
|
+11
|
|
(1,659)
|
|
|
(1,424)
|
|
|
+17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Deere & Company
|
$
|
688
|
|
|
$
|
670
|
|
|
+3
|
|
$
|
3,065
|
|
|
$
|
2,800
|
|
|
+9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Operating
profit is income from continuing operations before corporate
expenses, certain external interest expense, certain foreign
exchange gains and losses and income taxes. Operating profit
of the financial services segment includes the effect of interest
expense and foreign exchange gains or losses.
|
|
|
|
**
|
Other
reconciling items are primarily corporate expenses, certain
external interest expense, certain foreign exchange gains and
losses and net income attributable to noncontrolling
interests.
|
SOURCE Deere & Company