Deere & Co. Inc.’s stock experienced a significant decline of 5.5% early Thursday. This came after the company, known for manufacturing agricultural and construction machinery, reported earnings for its fiscal second quarter that surpassed expectations. However, the provided guidance fell short of estimates, leading to the decline in stock value.
Deere, headquartered in Moline, Illinois, reported a net income of $2.370 billion, or $8.53 per share, for the quarter ending on April 28. This is a decrease from the $2.860 billion, or $9.65 per share, earned in the same period last year.
The sales experienced a 12% decrease, dropping to $15.235 billion from $178.387 billion in the previous year.
The FactSet consensus projected earnings per share of $7.86 and sales of $13.291 billion.
According to Chief Executive John C. May, the figure was influenced by ongoing shifts in the global agricultural industry.
The company’s projected net income for fiscal 2024 has been revised to approximately $7.0 billion. This is a decrease from the initial guidance of $7.5 billion to $7.75 billion that was provided in February alongside the first-quarter earnings report. The projected net income, according to FactSet consensus, is $7.5 billion.
“We are actively monitoring our production and inventory levels to effectively respond to changes in demand and strategically position the business for the future,” May stated in his prepared remarks. Regardless of the current market conditions, we remain dedicated to our strategy and are actively investing in and implementing cutting-edge technologies, products, and solutions to guarantee the success of our customers.
Deere’s business segments experienced a decline in sales. Production and precision agriculture sales dropped by 16% to $6.58 billion, while small agriculture and turf sales tumbled by 23% to $3.19 billion. Unfortunately, price increases were not enough to compensate for the decrease in shipment volumes. Sales in the construction and forestry sector experienced a 7% decline, amounting to $3.844 billion.
According to the company, the agriculture industry in the U.S. and Canada is projected to decline by 15%, while the smaller agriculture and turf industry is expected to see a 10% decrease. Meanwhile, the construction and equipment industry is anticipated to remain steady or experience a slight decline of up to 5%.
Deere is anticipating a decrease in production and precision agriculture sales of approximately 20% to 25%. Sales in the small agriculture and turf sector are projected to decline by the same percentage. Additionally, the company expects a 5% to 10% decrease in sales for the construction and forestry segment.
The stock has experienced a 3.5% decline year to date, which is lower than the 11.3% gain of the S&P 500.
