Summary
Deere & Company reported a decline in net sales and revenues for the second quarter and first six months of fiscal year 2016 compared to the prior year, reflecting ongoing challenges in the agricultural and construction equipment markets. Net income attributable to Deere & Company also saw a significant decrease, impacted by lower sales volumes, unfavorable currency translation, and a less favorable product mix. Despite these headwinds, the company's financial services segment demonstrated resilience, though its profitability was also affected by factors such as higher lease residual value losses and an increased provision for credit losses. Management acknowledges the current market downturn but expresses confidence in the company's strong financial position and its ability to capitalize on future growth opportunities. The company is focused on operational efficiencies and cost management to navigate the challenging environment. Deere & Company also highlighted progress in implementing new accounting standards and provided an updated full-year net income forecast. Investors should note the continued emphasis on cost control and the company's outlook for sales in key segments, which remains cautious for the remainder of the fiscal year.
Financial Highlights
46 data points| Revenue | $7.88B |
| Cost of Revenue | $5.53B |
| Gross Profit | $1.57B |
| R&D Expenses | $345.00M |
| SG&A Expenses | $714.80M |
| Operating Expenses | $7.14B |
| Operating Income | $848.00M |
| Interest Expense | $191.00M |
| Net Income | $496.00M |
| EPS (Basic) | $1.57 |
| EPS (Diluted) | $1.56 |
| Shares Outstanding (Basic) | 315.10M |
| Shares Outstanding (Diluted) | 316.50M |
Key Highlights
- 1Net sales and revenues decreased by 4% for the second quarter and 8% for the first six months of fiscal 2016 compared to the prior year.
- 2Net income attributable to Deere & Company fell to $495.4 million ($1.56/share) for the second quarter and $749.8 million ($2.36/share) for the first six months, down from $690.5 million ($2.03/share) and $1,077.2 million ($3.14/share) respectively.
- 3The Agriculture and Turf segment sales were flat for the quarter and down 5% year-to-date, while Construction and Forestry segment sales declined significantly by 16% and 20% respectively.
- 4Financial Services segment net income decreased due to higher losses on lease residual values, less favorable financing spreads, and a higher provision for credit losses.
- 5The company updated its full-year fiscal 2016 net income forecast to approximately $1,200 million, including a gain from the sale of a portion of its interest in SiteOne Landscapes, LLC.
- 6Deere & Company's consolidated cash and cash equivalents decreased by $29 million in the first six months of fiscal 2016, reflecting negative cash flows from operating activities.
- 7The company maintained its strong financial position, with total debt to total capital for equipment operations at 40% as of April 30, 2016.