Summary
Deere & Company's first quarter of fiscal year 2017 reported a decrease in net income attributable to the company to $193.8 million, or $0.61 per share, down from $254.4 million, or $0.80 per share, in the prior year period. This decline was primarily driven by lower results in the Financial Services segment due to less favorable financing spreads and voluntary employee separation expenses, as well as higher effective tax rates impacting the equipment operations. Despite the decrease in net income, consolidated net sales and revenues saw a slight increase of 2% to $5,625 million, driven by favorable currency translation and price realization, although net sales for the equipment operations themselves experienced a marginal 1% decline. Despite the year-over-year decline in profitability, the company highlighted operational execution, a broad product portfolio, and a more flexible cost structure as contributing factors to performance. The company reaffirmed its fiscal year 2017 net income forecast of approximately $1,500 million. Key segment performance showed Agriculture and Turf sales were flat, Construction and Forestry sales decreased by 6%, and Financial Services net income declined. The company continues to focus on cost reductions and operational efficiency, anticipating stabilization in key agricultural markets.
Financial Highlights
45 data points| Revenue | $5.63B |
| Cost of Revenue | $3.78B |
| Gross Profit | $916.00M |
| R&D Expenses | $312.10M |
| SG&A Expenses | $667.30M |
| Operating Expenses | $5.30B |
| Operating Income | $422.00M |
| Interest Expense | $208.10M |
| Net Income | $199.00M |
| EPS (Basic) | $0.63 |
| EPS (Diluted) | $0.62 |
| Shares Outstanding (Basic) | 316.70M |
| Shares Outstanding (Diluted) | 319.70M |
Key Highlights
- 1Net income attributable to Deere & Company decreased to $193.8 million ($0.61/share) in Q1 FY17 from $254.4 million ($0.80/share) in Q1 FY16.
- 2Consolidated net sales and revenues increased 2% to $5,625 million, while equipment net sales decreased 1% to $4,698 million.
- 3The Financial Services segment experienced a decline in net income due to less favorable financing spreads and voluntary employee separation expenses.
- 4Equipment Operations saw an improvement in operating profit to $247 million from $214 million, driven by price realization and a gain on the sale of a partial interest in SiteOne, partially offset by separation program costs and higher warranty costs.
- 5The company maintained its full-year fiscal 2017 net income forecast of approximately $1,500 million.
- 6Industry sales for agricultural equipment in the U.S. and Canada are forecast to decrease 5-10% for FY17, while South American sales are projected to increase 15-20%.
- 7Company's overall cash position decreased by $446 million during the quarter.