Deere & Company (NYSE:DE) beats analysts expectations

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Deere & Company (NYSE:DE) stock rose 5.32% (As on Nov 25, 7:32:57 AM UTC-4, Source: Google Finance) after the company posted stronger-than-expected fiscal-fourth-quarter earnings, but noted that supply chain pressures will continue to pose a challenge to an otherwise solid profit outlook for its coming fiscal year. More than 10,000 Deere workers were on strike at plants in Iowa, Illinois and Kansas from mid-October until last week when the United Auto Workers union accepted the company’s third offer that included 10% immediate raises and an $8,500 ratification bonus. Deere officials estimated that the new contract will increase its pretax costs by about $250 million to $300 million a year, but that won’t put a significant dent in its profits. Worldwide financial services net income attributable to Deere and Company in the fourth quarter was $227 million, benefiting from income earned on higher average portfolio and favorable financing spreads, as well as improvements on the operating lease portfolio, partially offset by a higher provision for credit losses. Results for the prior period were also affected by employee separation costs.

DE in the fourth quarter of FY 21 has reported the adjusted earnings per share of $4.12, beating the analysts’ estimates for the adjusted earnings per share of $3.90, according to Refinitiv. The company had reported the adjusted revenue growth of 16 percent to $10.28 billion in the fourth quarter of FY 21, slightly missing the analysts’ estimates for revenue of $10.34 billion.

For fiscal 2022, Deere predicts its profits will grow even higher to between $6.5 billion and $7 billion as demand for its iconic green tractors remains high and infrastructure spending helps boost demand for its construction equipment. The company said demand will likely exceed what Deere can produce next year again because of the ongoing supply chain problems.

For production and Precision Ag, net sales are forecast to be up between 20% and 25% in fiscal year ’22. Forecast includes expectations of about 9 points of positive price realization for the full year. For the segment’s operating margin, the full-year forecast is between 20% and 21%, reflecting consistently solid financial performance across the various geographical regions. The forecast for the Small Ag and Turf segment. The company expects net sales in fiscal year ’22 to be up 15% to 20%. This guidance includes nearly 7 points of positive price realization and roughly 1 point of currency headwind. The segment’s operating margin is forecasted to range between 16% and 17%.

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