Deere & Company (NYSE:DE) stock fell 5.15% (As on November 22, 11:29:32 AM UTC-4, Source: Google Finance) after the company forecast smaller-than-expected profit next year, with slowing equipment demand from farmers starting to weigh on the world’s largest tractor maker. Net income for the fiscal year will be between $7.75 billion and $8.25 billion, Deere said after reporting fourth-quarter earnings that beat analyst estimates. Its full-year outlook came in well below estimates compiled by Bloomberg of $9.32 billion. Worldwide net sales and revenues decreased 1 percent, to $15.412 billion, for the fourth quarter of fiscal 2023 and rose 16 percent, to $61.251 billion, for the full year. Production and precision agriculture sales decreased for the quarter due to lower shipment volumes partially offset by price realization. Operating profit improved primarily due to price realization partially offset by lower shipment volumes / sales mix and higher SA&G and R&D expenses. The prior period was impacted by higher reserves on assets in Russia. Small agriculture and turf sales decreased for the quarter due to lower shipment volumes partially offset by price realization. Operating profit decreased due to lower shipment volumes / sales mix and higher SA&G and R&D expenses, partially offset by price realization. Construction and forestry sales increased for the quarter due to price realization and higher shipment volumes. Operating profit improved primarily due to price realization, partially offset by higher production costs, less-favorable sales mix, the unfavorable effects of foreign currency exchange, and a loss on the sale of the Russian roadbuilding business. The prior period was impacted by higher reserves on assets in Russia.
Moreover, Financial services net income for the quarter decreased due to unfavorable derivative valuation adjustments, less-favorable financing spreads, and a higher provision for credit losses (excluding reserves in Russia). These factors were partially offset by income earned on a higher average portfolio. In the fourth quarter of 2022, financial services increased its reserves for credit losses in Russia and recorded an intercompany benefit from the equipment operations, which guarantees the financial services’ investment in certain international markets, including Russia.
DE in the third quarter of FY 23 has reported the adjusted earnings per share of $8.26, beating the analysts’ estimates for the adjusted earnings per share of $7.48. The company had reported the adjusted revenue of $13.801 billion in the third quarter of FY 23, beating the analysts’ estimates for revenue of $13.64 billion.
Fiscal-year 2024 net income attributable to Deere & Company for the financial services operations is forecast to be approximately $770 million. Results are expected to be higher in 2024 due to income earned on a higher average portfolio, partially offset by less-favorable financing spreads and lower gains on operating-lease residual values.