Deere & Co. (DE) posted better-than-expected first quarter earnings Friday, and bumped up its full-year profit forecast as it sees improving global demand for farm and construction equipment.
Deere said earnings for the three months ending on December 31, the group's fiscal first quarter, came in at $2.92 per share, down 24.5% from the same period last year but well ahead of the Street consensus forecast of $2.26 per share. Group worldwide sales, Deere said, rose 18.8% from last year to $9.57 billion, again topping analysts' forecasts of an $8.28 billion tally.
Looking into the end of the 2022 fiscal year Deer said it sees net income of between $6.7 billion and $7.1 billion, a modest increase from its prior forecasts, with solid demand for farm and construction equipment, increased infrastructure spending and favorable crop prices.
“Deere’s performance in the first quarter was impressive given production issues surrounding the delayed ratification of our UAW contract in late November as well as persistent challenges posed by the supply chain and pandemic,” said CEO John May, chairman and chief executive officer. “These factors led to higher production costs in the quarter. We continue to work closely with key suppliers to manage the situation, enabling our customers to deliver food production and critical infrastructure."
“Looking ahead, we expect demand for farm and construction equipment to continue benefiting from strong fundamentals,” May added. “At the same time, we are excited about the opportunities to create value for our customers and other stakeholders as outlined in our goals. Because of the hard work that has been done executing the Smart Industrial operating model, we are leveraging technology that delivers improved customer profitability, productivity, and sustainability."
Deere & Co. shares were marked 1.45% lower in early Friday trading immediately following the earnings release to indicate an opening bell price of $375.00 each.
Deere's larger rival, Caterpillar (CAT) cautioned last month that slowing global growth, alongside rising input and commodity prices, would pinch the group's profit margins heading into the first half of the year, an assessment that clouded its stronger-than-expected forth quarter earnings.
Last November. Deere reached an agreement with United Auto Workers members to end a six-week strike linked to pay and benefit demands.
UAW members at facilities in Illinois, Iowa and Kansas voted 61% to 39% in favor of the new agreement, with Deere saying it made "modest modifications" to its early November proposal -- rejected by the UAW -- which called for wage increases, improved healthcare benefits, pension boosts and a ratification bonus of $8,500.
