Deere & Company has reported a 28% drop in revenue as sales crumbled during its fiscal 2024 fourth quarter (Q4) result period
Factory shutdowns are now becoming part of Tractor and farm equipment manufacturing as Deere & Company Q4 results have followed a steady trend over the past year by slumping for the fourth consecutive quarter, with revenue compared to the same period last year down 28% to US$11.14 billion.
And to make matters worse, net income for Q4 has also plunged by 47% to be sitting at US$1.25 billion as compared with net income of US$2.37 billion for the same quarter in 2023. For fiscal 2024, net income attributable to Deere & Company was US$7.100 billion and that compares poorly with the US$10.16 billion gleaned 12 months ago for fiscal-year 2023.
Taking in the overall situation, worldwide net sales and revenues for Deere & Company decreased 16%, to US$51.716 billion, for the full year. Net sales were US$9.275 billion for the quarter and US$44.759 billion for the year, compared with $13.801 billion and $55.565 billion in fiscal 2023, respectively.
But for anyone invested in the stock, don’t even break into a mild sweat as this bellwether company manufacturing Tractors and farm equipment has already beaten early market predictions, and its share price is rising.
From where that overall optimism is emanating is a little hard to fathom, as even the company itself has predicted ongoing headwinds moving into 2025.
Tractor and farm equipment sales reached heady record results during calendar years 2021, and 2022 worldwide, and most analysts do not expect to see improved Tractor and farm equipment spending before 2027 as shiny Duco is already prominent in most farm machinery fleets at present.
Add to that, industry pundits predicting much hotter than average temperatures for 2025 and 2026,
As farmers have become gun-shy about the exorbitant asking prices of new Tractors and farm equipment, they have withdrawn to count their cash from season 2024-25 before they decide what to do with it.
In the meantime, industry heads are becoming just a little giddy as concern for lack of sales deepens and floor stock costs become unbearable for many farm dealer businesses.
Reacting to sales conditions
Always a steady hand in the equation, Deere & Company Chairman and CEO John May had this to say, “Amid significant market challenges this year, we proactively adjusted our business operations to better align with the current environment.
“Together with the structural improvements made over the past several years, these adjustments enable us to serve our customers more effectively and achieve strong results across the business cycle.
“As we navigate ongoing headwinds across our markets, we remain committed to making meaningful investments in our future while deepening our relationships with customers,” John May continued.
Net income attributable to Deere & Company for fiscal 2025 is forecasted to be in the range of US$5.0 to US$5.5 billion.
“Our team of over 75,000 dedicated employees come to work each day with a singular focus: delivering products and solutions that enhance efficiency and reduce operating costs for our customers. By providing the essential tools they need, we empower our customers to succeed and thrive in an ever evolving and challenging landscape,” John May concluded.
Pricing in some corrections
Deere & Company has relayed through Director of Investor Relations Josh Beal that it remains confident about producing to demand during fiscal year 2025.
Analysts also expect Deere’s high decremental margin to improve in fiscal year 2025, largely due to adjustments from its peak production levels.
Those adjustments are based on layoffs and factory disruption inefficiencies, “compounded by significant wage inflation in North America from the 6-year UAW agreement.
Reduced demand for farm machinery has already led to Deere and company reducing its workforce during 2024. According to best industry estimates, since March 2024 the company has laid off 26,000 operations workers across its network of plants in Ankeny, Dubuque, Ottumwa, Waterloo and the Quad Cities’ Davenport and East Moline.
In addition, other staff and managers at Deere and Company’s Urbandale research centre and Moline, as well as office workers in Johnston and Dubuque have also been let go.
The company has announced it will suspend production at its plant in Ottumwa Iowa US for a month from early December 2024 until early January 2025. Due it said, in the wake of reduced demand for ag equipment.
The Ottumwa plant manufactures John Deere hay and forage equipment and employs around 400 workers who will receive close to their normal pay while the plant is shutdown.
How the divisions fared in Q4
Sales across the board pretty much dipped for all Deere & Co operating divisions with big farm tractors and equipment along with precision agriculture showing a sales decrease in Q4 of 38% when compared to the same period last year.
Net sales only reached US$4.3 billion for this division, a far cry from the US$6.9 billion achieved in the same quarter last year.
Operating profit from these sales took an extreme hit, dipping by 64% to reveal only US$657 million banked this year for Q4 as compared to the US$1.83 billion banked for the same period last year.
Small agriculture and turf sales also struggled for Q4 with sales marked at a 25% decrease over the same time last year.
Net sales came in at US$2.3 billion for this division, and that compares to US$3.09 billion from the same quarter last year.
Operating profit from the Small agriculture and turf sales division was down by 47% when compared to this time last year. With US$234 million banked this year for Q4 as compared to the US$444 million banked for the same period last year.
Construction and forestry sales held on a little better to show a 29% decline in Q4 as compared to last year.
Net sales reached US$2.66 billion for this division, and that compares to US$3.74 billion achieved in the same quarter last year.
However, operating profit from Construction and forestry failed to hold the line and dipping by 36% to reveal only US$328 million in the bank this year for Q4 as compared to the US$516 million banked for the same period last year.
Deere & Co results Q4 overview
