No recession talk here as Deere & Co posts a net sales and revenue increase of 10.9% for the second quarter of 2022 to show a US$2.1 billion profit for just three month’s work
Deere & Co’s income for a single quarter (3 months) puts everything about the farm business into a clear perspective, things have never looked better for farm machinery manufacturers.
Demand for product is such that customers worldwide now have to wait from 12 to 18 months for delivery, with January 2024 the best you will do for an order placed today for many of the most popular model lines.
Deere & Co is a major beneficiary of these good times in farming, and as a result has posted net sales and revenue of US$13.370 billion for the second quarter of 2022. This compares to US$12.058 billion for the second quarter of 2021, a 10.9% increase.
And for a running summary of the full year to date, Deere & Co has written up US$22.939 billion of sales and consolidated revenue and expects to post a net income as high as US$7.4 billion.
Full of beans with this result, John C. May, chairman and CEO of Deere & Co had this to say, “Deere’s second-quarter performance reflected a continuation of strong demand even as we face supply-chain pressures affecting production levels and delivery schedules.
“Deere employees, suppliers, and dealers are working hard to address these challenges. We are proud of their extraordinary efforts to get products to our customers as soon as possible under the challenging circumstances,” May added.
From this stampede of sales for the John Deere badge, it’s the eye-watering profit expected to flow through that is grabbing all the attention. For the fiscal year 2022, net income for Deere & Co is expected to be no less than US$7.0 billion, with the more likely result being closer to US$7.4 billion.
“Looking ahead, we believe demand for farm equipment will continue benefitting from positive fundamentals in spite of availability concerns and inflationary pressures affecting our customers’ input costs,” May continued.
“The company’s smart industrial strategy and recently announced Leap Ambitions are focused on helping customers manage higher costs and increasingly scarce inputs, while improving their yields, through the use of our integrated technologies,” May concluded.
Deere Agriculture and Turf division
Production and precision agriculture sales increased for the quarter with higher price realisations achieved and higher shipment volumes. As a result, operating profit rose.
Deere’s high powered and precision agriculture division simply powered ahead with net sales of US$5.117 billion, an 13% hike above the US$4.529 billion scored for the second quarter in 2021.
The operating profit of US$1.057 billion was 5% higher than the record result of US$1.007 billion recorded for the second quarter in 2021. However, increased shipping costs began to bite and saw the operating profit margin slip to 20.7% when compared to 2021 second quarter results of 22.3%.
Meanwhile the Deere & Co small agriculture & turf segment did run into several higher production costs and while its stakes also rose in the second quarter it was more subdued with net sales of US$3.570 billion, a mere 5% increase on the US$3.390 billion pieced together for this division in the second quarter of 2021.
Deere construction division
Even in Deere’s construction division it was hard to keep up with orders. Net sales were US$3.347 billion, an 8.7% jump above the US$3.079 billion raked in for the second quarter in 2021.
The operating profit of US$814 million was an astonishing 66% higher than US$489 million recorded for the second quarter in 2021, With an operating profit margin up to 24.3%, it sent Deere & Co on a spending junket.
With plenty of spare cash, Deere & Co went on a buying spree and acquired majority ownership in Kreisel Electric Inc, a pioneer in the development of immersion-cooled battery technology for a cool US$276 million.
Not satisfied with that one purchase, the company also went on to buy full ownership of three Deere-Hitachi joint venture factories and lined up contracts to instead supply Hitachi Construction Machinery with machines built in those locations.
Deere & Co also ended the joint venture manufacturing and marketing agreements previously in place between the two companies, as Hitachi became a Deere & Co customer instead.
