Deere & Company (NYSE: DE) has posted better than expected results in the fourth quarter of FY 17 due to the improving demand for farm machinery. Overall, in the fourth quarter, the net income attributable to the company grew 79 percent to $510.3 million. Accordingly, DE stock has risen 57.92% in the last one year (source: Google Finance) while the stock rose over 4.3% on November 22nd, 2017 on decent results.
Deere & Company in the fourth quarter of FY 17 has reported the adjusted earnings per share of $1.57, beating the analysts’ estimates for the adjusted earnings per share of $1.47. The company had reported the adjusted revenue growth of 25.5 percent to $7.09 billion in the fourth quarter of FY 17, beating the analysts’ estimates for revenue of $6.99 billion.
For FY 18, DE expects the net sales to rise 19 percent, which means sales of $35.39 billion and earnings to grow to about $2.6 billion. The analysts on average expects 2018 net sales of $28.06 billion and earnings of $2.3 billion, according to Thomson Reuters.
The company gets 70 percent of sales from agricultural equipment and around 60 percent of sales from the North American farm equipment market. DE in 2018, expects higher demand for large equipment to increase the sales at its agriculture and turf division in the U.S. and Canada by 5 percent to 10 percent. Further, the sales of tractors and combines in South America are expected to be flat to up 5 percent next year. Moreover, in 2018, the worldwide sales of construction and forestry equipment to grow 69 percent in 2018, due to an improving global economy, higher housing starts in the U.S. and increased activity in the oil and gas sector. The acquisition of Germany’s Wirtgen Group is estimated to add about 54 percent to the construction and forestry division’s sales in 2018. DE expects its world-wide farm-equipment sales to increase about 9% in 2018, and its sales of farm and construction equipment to grow 22% in the FY 18
However, the strong harvest this year will keep crop prices and farmers’ incomes under pressure. The strengthening industrywide sales of high-horsepower equipment lately show that some farmers are buying again. Moline, Ill.-based Deere said sales growth in South America will likely be slower in 2018 after a recent boom there thanks to record harvests in Brazil.