Summary
Deere & Company (DE) has reported a significant turnaround in its fiscal year ended October 31, 2002, moving from a net loss of $64 million in 2001 to a net income of $319 million. This improvement was driven by better price realization, effective cost reduction initiatives, and positive customer response to new products across its agricultural and commercial and consumer equipment segments. The company's financial services segment also demonstrated strength, with net income increasing to $262 million. Looking ahead, Deere & Company projects continued growth, forecasting equipment sales to increase by 8-10% for the full fiscal year 2003. This optimism is supported by expected improvements in agricultural commodity prices, new product introductions like the 100-series lawn tractors, and a strategic marketing agreement with Hitachi Construction Machinery. The company is also managing its financial structure effectively, with credit operations expected to see a more than 20% increase in net income.
Key Highlights
- 1Significant recovery in net income, swinging from a $64 million loss in FY2001 to $319 million in FY2002.
- 2Consolidated net sales increased by 5% to $13.95 billion in FY2002.
- 3Equipment Operations saw a 6% increase in net sales, driven by overseas agricultural equipment and commercial/consumer segments, though construction and forestry sales lagged.
- 4Financial Services segment net income rose to $262 million, a substantial increase from $192 million in FY2001.
- 5Strong consolidated cash flow from operations of $1.9 billion in FY2002.
- 6Company forecasts full-year 2003 equipment sales to increase by 8-10% and enterprise net income to be between $500 million and $600 million.
- 7Adoption of FASB Statement No. 142 in FY2003 is expected to provide a favorable $53 million after-tax impact by eliminating goodwill expense.