10-KPeriod: FY2015

DEERE & CO Annual Report, Year Ended Oct 31, 2015

Filed December 18, 2015For Securities:DE

Summary

Deere & Company's 2015 10-K filing reveals a challenging year for the company, marked by a significant decline in net income and revenues compared to 2014. This downturn is attributed to lower shipment volumes and unfavorable currency translation effects impacting both the Agriculture and Turf, and Construction and Forestry segments. The company's financial services segment, however, showed a slight increase in net income, benefiting from growth in its credit portfolio and a prior crop insurance sale, though this was partially offset by less favorable financing spreads and increased losses on residual values. Despite the weaker financial performance in 2015, management expresses confidence in the company's long-term strategy and its ability to navigate industry downturns. The outlook for fiscal year 2016 anticipates further declines in equipment sales, particularly in the agricultural sector, driven by low commodity prices and stagnant farm incomes. The company continues to focus on product innovation, meeting stringent emissions standards, and managing global risks, including currency fluctuations and economic uncertainties.

Financial Highlights

38 data points
Beta

Revenue

$28.86B

30.2% Gross Margin

Net Income

$1.94B

6.7% Net Margin

EPS (Diluted)

$5.77

Total Assets

$57.88B

Cash & Equivalents

$4.16B

Free Cash Flow

$3.05B

Financial Statements
Beta
Revenue$28.86B
Cost of Revenue$20.14B
Gross Profit$8.72B
R&D Expenses$1.43B
SG&A Expenses$2.87B
Operating Expenses$26.08B
Operating Income$3.14B
Interest Expense$680.00M
Net Income$1.94B
EPS (Basic)$5.81
EPS (Diluted)$5.77
Shares Outstanding (Basic)333.60M
Shares Outstanding (Diluted)336.00M

Key Highlights

  • 1Deere & Company experienced a significant year-over-year decrease in net income (down 39%) and net sales and revenues (down 20%) for the fiscal year ended October 31, 2015, primarily due to lower shipment volumes and adverse currency impacts.
  • 2The Agriculture and Turf segment saw a substantial drop in net sales (down 25%) and operating profit, reflecting weakness in the global agricultural sector.
  • 3The Construction and Forestry segment also reported lower net sales (down 9%) and operating profit, impacted by weak conditions in certain markets.
  • 4The Financial Services segment's net income attributable to Deere & Company increased slightly by 1.4% to $633 million, supported by portfolio growth but hindered by less favorable financing spreads and higher residual value losses.
  • 5The company anticipates a further decline in equipment sales for fiscal year 2016, with agricultural equipment sales projected to decrease by approximately 8% globally.
  • 6Deere & Company repurchased $2,771 million of its common stock in fiscal year 2015, demonstrating a commitment to returning capital to shareholders.
  • 7The company's consolidated backlog of orders is expected to decrease, reflecting the anticipated lower sales volumes in the upcoming fiscal year.

Frequently Asked Questions

The primary drivers for the reduced financial performance in fiscal year 2015 were lower shipment volumes across its equipment segments (Agriculture and Turf, and Construction and Forestry) and unfavorable foreign currency translation effects. These factors led to a significant decrease in both net sales and net income compared to the prior year.

Deere & Company's outlook for fiscal year 2016 anticipates continued weakness, with worldwide agriculture and turf equipment sales projected to decrease by approximately 8%. This decline is attributed to factors such as low commodity prices and stagnant farm incomes, which are expected to most significantly impact higher horsepower tractor sales. Industry sales in key markets like the U.S. and Canada are also forecast to be down considerably.

The Financial Services segment's net income attributable to Deere & Company increased slightly to $633 million in fiscal year 2015. This improvement was mainly due to growth in the average credit portfolio and benefits from a prior crop insurance sale. However, results were partially offset by less favorable financing spreads and higher losses on residual values for construction equipment operating leases. For fiscal year 2016, net income for the segment is expected to be approximately $550 million, reflecting less favorable financing spreads and an increased provision for credit losses.

In fiscal year 2015, Deere & Company repurchased $2,771 million of its common stock under an $8,000 million repurchase plan. The company also continued to pay dividends, with dividends declared per share increasing to $2.40 in 2015 from $2.22 in 2014, indicating a commitment to returning capital to shareholders.