2011 News Releases and Information
Deere Completes Record Year With Fourth-Quarter Earnings of $670 Million
MOLINE, Illinois (November 23, 2011) — Net income attributable to Deere & Company was $669.6 million, or $1.62 per share, for the fourth quarter ended October 31, compared with $457.2 million, or $1.07 per share, for the same period last year.
For fiscal 2011, net income attributable to Deere & Company was $2.800 billion, or $6.63 per share, compared with $1.865 billion, or $4.35 per share, last year.
Worldwide net sales and revenues increased 20 percent, to $8.612 billion, for the fourth quarter and were up 23 percent to $32.013 billion for the full year. Net sales of the equipment operations were $7.903 billion for the quarter and $29.466 billion for full-year 2011, compared with $6.564 billion and $23.573 billion for the corresponding periods last year.
"John Deere has completed another year of exceptional achievement," said Samuel R. Allen, chairman and chief executive officer. "Our success reflects a continued pattern of strong customer response to our innovative lines of equipment coupled with the skillful execution of business plans aimed at expanding our global competitive position."
During the year, Deere introduced a record number of products and announced plans for six new factories, in China, Brazil and India. "John Deere's record performance is a further tribute to our operating model, which stresses rigorous cost management and asset efficiency," Allen stated. "As a result, we are achieving unprecedented financial results and generating healthy levels of cash flow. These dollars are funding growth throughout the world and also are being shared directly with investors in the form of dividends and share repurchases."
Summary of Operations
Net sales of the worldwide equipment operations increased 20 percent for the quarter and 25 percent for the year. Sales included a favorable currency-translation effect of 2 percent for the quarter and 3 percent for the year and price increases of 3 percent for both periods. Equipment net sales in the United States and Canada rose 14 percent for the quarter and 17 percent for the year. Outside the U.S. and Canada, net sales were up 31 percent and 38 percent for the respective periods, with favorable currency-translation effects of 4 percent and 7 percent.
Deere's equipment operations reported operating profit of $955 million for the quarter and $3.839 billion for the year, compared with $716 million and $2.909 billion last year. Results were better for both periods largely due to higher shipment volumes and improved price realization. These factors were partially offset by increased raw-material costs, higher manufacturing-overhead costs related to new products, and higher research and development expenses. In addition, full-year results were impacted by higher selling, administrative and general expenses.
Net income of the company's equipment operations was $552 million for the quarter and $2.329 billion for the year, compared with $357 million and $1.492 billion last year. The same operating factors mentioned above, along with a lower effective tax rate, affected both the quarterly and annual results.
Financial services reported net income attributable to Deere & Company of $122.1 million for the quarter and $471.0 million for the year compared with $98.4 million and $372.5 million, respectively, last year. Results for both periods benefited from growth in the credit portfolio and a lower provision for credit losses, partially offset by narrower financing spreads and a higher effective tax rate. Included in 2010 fourth-quarter results was a write-down of wind-energy assets held for sale to fair value.
Company Outlook & Summary
In spite of an unsettled global economy, demand for John Deere products is expected to experience substantial growth in fiscal year 2012 and the company is forecasting further increases in sales and earnings as a result. Company equipment sales are projected to increase about 15 percent for the year and to be up 16 to 18 percent for the first quarter compared with the same periods of 2011. Included is a favorable currency-translation impact of about 3 percent for the quarter and about 1 percent for the year. For the full year, net income attributable to Deere & Company is anticipated to be approximately $3.2 billion.
Supported by record 2011 performance, John Deere remains well-positioned to carry out its extensive growth plans and capitalize on positive long-term economic trends, according to Allen. "Thanks in large part to the dedication and hard work of our employees, dealers and suppliers worldwide, John Deere's plans for helping meet growing global needs for food and infrastructure are moving ahead at an accelerated rate," he said. "We are proud of the company's performance in 2011 and look forward to building on these gains in 2012 and beyond. We have great confidence in the company's future and our role in helping feed, clothe and shelter the world's growing population. These developments in our view hold great promise, which should prove rewarding to our investors and other stakeholders in the future."
Equipment Division Performance
Market Conditions & Outlook
John Deere Capital Corporation
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Statements under "Company Outlook & Summary," "Market Conditions & Outlook," and other forward-looking statements herein that relate to future events, expectations, trends and operating periods involve certain factors that are subject to change, and important risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect particular lines of business, while others could affect all of the company's businesses.
The company's agricultural equipment business is subject to a number of uncertainties including the many interrelated factors that affect farmers' confidence. These factors include worldwide economic conditions, demand for agricultural products, world grain stocks, weather conditions (including its effects on timely planting and harvesting), soil conditions, harvest yields, prices for commodities and livestock, crop and livestock production expenses, availability of transport for crops, the growth of non-food uses for some crops (including ethanol and biodiesel production), real estate values, available acreage for farming, the land ownership policies of various governments, changes in government farm programs and policies (including those in Argentina, Brazil, China, Russia and the U.S.), international reaction to such programs, global trade agreements, animal diseases and their effects on poultry, beef and pork consumption and prices, crop pests and diseases, and the level of farm product exports (including concerns about genetically modified organisms).
Factors affecting the outlook for the company's turf and utility equipment include general economic conditions, consumer confidence, weather conditions, customer profitability, consumer borrowing patterns, consumer purchasing preferences, housing starts, infrastructure investment, spending by municipalities and golf courses, and consumable input costs.
General economic conditions, consumer spending patterns, real estate and housing prices, the number of housing starts and interest rates are especially important to sales of the company's construction and forestry equipment. The levels of public and non-residential construction also impact the results of the company's construction and forestry segment. Prices for pulp, paper, lumber and structural panels are important to sales of forestry equipment.
All of the company's businesses and its reported results are affected by general economic conditions in the global markets in which the company operates, especially material changes in economic activity in these markets; customer confidence in general economic conditions; foreign currency exchange rates and their volatility, especially fluctuations in the value of the U.S. dollar; interest rates; and inflation and deflation rates. General economic conditions can affect demand for the company's equipment as well.
Customer and company operations and results could be affected by changes in weather patterns (including the effects of dry weather in parts of the U.S. and wet weather in parts of Eastern and Western Europe); the political and social stability of the global markets in which the company operates; the effects of, or response to, terrorism and security threats; wars and other conflicts and the threat thereof; and the spread of major epidemics.
Significant changes in market liquidity conditions and any failure to comply with financial covenants in credit agreements could impact access to funding and funding costs, which could reduce the company's earnings and cash flows. Financial market conditions could also negatively impact customer access to capital for purchases of the company's products and customer confidence and purchase decisions; borrowing and repayment practices; and the number and size of customer loan delinquencies and defaults. The sovereign debt crisis, in Europe or elsewhere, could negatively impact currencies, global financial markets, social and political stability, funding sources and costs, customers, and company operations and results. State debt crises also could negatively impact customers, suppliers, demand for equipment, and company operations and results. The company's investment management activities could be impaired by changes in the equity and bond markets, which would negatively affect earnings.
Additional factors that could materially affect the company's operations, access to capital, expenses and results include changes in and the impact of governmental trade, banking, monetary and fiscal policies, including financial regulatory reform and its effects on the consumer finance industry, derivatives, funding costs and other areas, and governmental programs in particular jurisdictions or for the benefit of certain industries or sectors (including protectionist policies and trade and licensing restrictions that could disrupt international commerce); actions by the U.S. Federal Reserve Board and other central banks; actions by the U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures Trading Commission and other financial regulators; actions by environmental, health and safety regulatory agencies, including those related to engine emissions (in particular Interim Tier 4 and Final Tier 4 emission requirements), carbon emissions, noise and the risk of climate change; changes in labor regulations; changes to accounting standards; changes in tax rates, estimates, and regulations; compliance with U.S. and foreign laws when expanding to new markets; and actions by other regulatory bodies including changes in laws and regulations affecting the sectors in which the company operates. Customer and company operations and results also could be affected by changes to GPS radio frequency bands or their permitted uses.
Other factors that could materially affect results include production, design and technological innovations and difficulties, including capacity and supply constraints and prices; the availability and prices of strategically sourced materials, components and whole goods; delays or disruptions in the company's supply chain due to weather, natural disasters or financial hardship or the loss of liquidity by suppliers; start-up of new plants and new products; the success of new product initiatives and customer acceptance of new products; changes in customer product preferences and sales mix whether as a result of changes in equipment design to meet government regulations or for other reasons; oil and energy prices and supplies; the availability and cost of freight; actions of competitors in the various industries in which the company competes, particularly price discounting; dealer practices especially as to levels of new and used field inventories; labor relations; acquisitions and divestitures of businesses, the integration of new businesses; the implementation of organizational changes; difficulties related to the conversion and implementation of enterprise resource planning systems that disrupt business, negatively impact supply or distribution relationships or create higher than expected costs; changes in company declared dividends and common stock issuances and repurchases.
Company results are also affected by changes in the level and funding of employee retirement benefits, changes in market values of investment assets and the level of interest rates, which impact retirement benefit costs, and significant changes in health care costs including those which may result from governmental action.
The liquidity and ongoing profitability of John Deere Capital Corporation and other credit subsidiaries depend largely on timely access to capital to meet future cash flow requirements and fund operations and the costs associated with engaging in diversified funding activities and to fund purchases of the company's products. If market uncertainty increases and general economic conditions worsen, funding could be unavailable or insufficient. Additionally, customer confidence levels may result in declines in credit applications and increases in delinquencies and default rates, which could materially impact write-offs and provisions for credit losses.
The company's outlook is based upon assumptions relating to the factors described above, which are sometimes based upon estimates and data prepared by government agencies. Such estimates and data are often revised. The company, except as required by law, undertakes no obligation to update or revise its outlook, whether as a result of new developments or otherwise. Further information concerning the company and its businesses, including factors that potentially could materially affect the company's financial results, is included in the company's other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. Risk Factors of the company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q).
This media release, financial highlights, and more financial data are
available in PDF format.
For further information, the news media should call:Ken Golden
Director, Global Public Relations
Deere & Company