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Deere & Co. beats first quarter earnings estimate

Agriculture.com Staff 02/14/2007 @ 2:25pm

Deere & Company Wednesday announced worldwide net income of $238.7 million, or $1.04 per share, for the first quarter ended January 31, compared with $235.9 million, or $0.99 per share, for the same period last year, according to a company press release.

Income from continuing operations was $238.7 million, or $1.04 per share, for the quarter, versus $223.9 million, or $0.94 per share, last year.

Worldwide net sales and revenues increased 5 percent to $4.425 billion for the first quarter compared with $4.202 billion a year ago. Net sales of the equipment operations were $3.815 billion for the quarter compared with $3.691 billion last year.

Strong operating performance and a positive customer response to the company's advanced products and services contributed to the quarter's results, noted Robert W. Lane, chairman and chief executive officer. "Exciting new equipment and services are helping John Deere attract customers and expand our market presence throughout the world," Lane said. "In addition, our focus on rigorous asset management is allowing Deere to serve a growing global customer base while maintaining lean, efficient inventory levels. In fact, for the last 27 quarters, trade receivables and inventories in relation to sales have declined, compared with the same quarter of the prior year."

Summary of Operations

Net sales of the worldwide equipment operations increased 3 percent for the quarter. Included were positive effects for price changes and currency translation totaling 5 percent. Equipment sales in the U.S. and Canada were 5 percent lower for the quarter. Net sales outside the U.S. and Canada increased by 24 percent for the quarter, which included a positive currency-translation effect of approximately 7 percent.

Deere's equipment divisions reported operating profit of $270 million for the quarter compared with $261 million last year. Higher operating profit for the quarter was primarily the result of improved price realization, partially offset by higher selling and administrative expenses. The impact of lower construction-equipment volumes in the U.S. and Canada was mostly offset by higher volumes outside the region from the company's agricultural equipment and construction and forestry operations.

Deere's ongoing emphasis on asset management is continuing to yield positive results. Trade receivables and inventories at the end of the quarter were $5.672 billion, or 28 percent of previous 12-month sales, compared with $5.911 billion, or 30 percent of sales, a year ago.

Financial services reported net income of $88.2 million for the quarter compared with $96.6 million last year. Income from continuing operations was $88.2 million for the quarter versus $84.6 million a year earlier. Income benefited from growth in the credit portfolio, partially offset by a higher provision for credit losses and higher selling and administrative expenses.

Company Outlook

Deere sales are projected to be up slightly for full-year 2007 and to increase approximately 5 percent for the second quarter. Net income is forecast to be around $1.4 billion for the year and in a range of $525 million to $550 million for the second quarter.

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