Deere Sales Jump Despite Supply-Chain Challenges


Deere & Co. said sales rose in its first quarter but results were hit by both supply-chain issues and a charge related to recent U.S. tax changes.

The company swung to a loss on a $965.1 million charge, as it wrote down the value of deferred tax assets on a reduction in the corporate tax rate.

Chief Executive Samuel Allen said in prepared remarks the company encountered “bottlenecks in the supply chain and logistical delays in shipping products to our dealers.” However, he noted that strengthening conditions in global agricultural and construction equipment markets should benefit the company in the current year.

Net sales were $5.97 billion, up 27{ff5548eb8b7551781742a29b9864cd1703b3791f37ac9790ae42b0c6a6bb7d63} from the year-earlier period. A portion of that boost — 5{ff5548eb8b7551781742a29b9864cd1703b3791f37ac9790ae42b0c6a6bb7d63} — came from Deere's purchase of a German maker of tractors and combines, which closed in December.

Agriculture and turf sales rose 18{ff5548eb8b7551781742a29b9864cd1703b3791f37ac9790ae42b0c6a6bb7d63} to $4.24 billion on higher shipment volumes and a positive contribution from currency-exchange rates. Construction and forestry sales rose 57{ff5548eb8b7551781742a29b9864cd1703b3791f37ac9790ae42b0c6a6bb7d63} to $1.73 billion, boosted by the Wirtgen Group acquisition and shipment volumes.

Shares rose 0.7{ff5548eb8b7551781742a29b9864cd1703b3791f37ac9790ae42b0c6a6bb7d63} to $168 in premarket trading.

Deere's results come as other heavy equipment makers have shown strong results of late. Caterpillar said it broke a yearslong sales slump in 2017 and signaled optimism about construction and mining markets in 2018.

Deere on Friday raised some of its fiscal 2018 financial targets, guiding 29{ff5548eb8b7551781742a29b9864cd1703b3791f37ac9790ae42b0c6a6bb7d63} growth in equipment sales, compared with its earlier forecast of 22{ff5548eb8b7551781742a29b9864cd1703b3791f37ac9790ae42b0c6a6bb7d63} growth. It also expects net sales and revenue to increase 25{ff5548eb8b7551781742a29b9864cd1703b3791f37ac9790ae42b0c6a6bb7d63} from the prior year, up from its earlier forecast of 22{ff5548eb8b7551781742a29b9864cd1703b3791f37ac9790ae42b0c6a6bb7d63}.

The Illinois-based company reported a loss of $535.1 million, or $1.66 per share, compared with a profit of $199 million, or 62 cents a share, a year prior. On an adjusted basis, excluding the tax impact and other charges, Deere posted a profit of $1.31 a share. Analysts polled by Thomson Reuters were expecting adjusted earnings per share of $1.20.

Source: DTN

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