Farm and construction equipment manufacturers Deere & Company (DE, Financial) posted second quarter earnings of $690 million or $2.03 per share, in the quarter ended April 30, 2015. Though this is down from $980.7 million or $2.65 per share earnings from the same quarter of last year, it still beat analystâs expectations and estimates. Estimates compiled by Bloomberg pegged net earnings at $1.56 per share.
âJohn Deere's second-quarter results were noteworthy in light of the weak conditions that continue to affect the global agricultural sector,â Samuel R. Allen, chairman and chief executive officer, said in a company release, âOur performance reflected the adept execution of our operating plans and contributions of a well-rounded business line-up. Deere's construction and forestry and financial-services divisions had higher results for the quarter, and our agriculture and turf operations remained solidly profitable despite lower demand for large models of farm machinery. We also saw benefits from our success developing a more responsive cost and asset structure, a fact that gives our performance a greater degree of resilience.â
Up and down
The company reported that agriculture sales in the United States and Canada have fallen by about 25% in 2015. Deere is the worldâs largest agriculture-equipment manufacturer and seller, and most of the companyâs revenue comes from this segment. Due to lesser spending by farmers on the back of falling crop prices, operating profit from the agriculture and turf segment of the business fell from $1.2 billion, in the same quarter last year, to $639 million in this quarter.
A 2 percent increase in sales of the construction and forestry segment saw the company receive a welcome boost. Analysts predict a fairly decent performance from construction equipment sales in the domestic market. About 15% of Deereâs equipment sales come from construction equipment sales. 63% of overall revenue comes from the domestic US market. US government data claimed that constructions pending in the country were up by 2% from 2014 figures.
Future projections
Deere projects a net income of $1.9 billion for fiscal 2015. It predicts a 19% decline in company equipment sales for the year and 17% decline for the third quarter. Projections in February this year, predicted a net income of $1.8 billion for the company.
âJohn Deere expects to be solidly profitable in 2015, with the year ranking among our stronger ones in sales and earnings despite the pullback in the farm sector,â CEO Allen said. âSuch an achievement illustrates our success establishing a wider range of revenue sources and a more durable business model. All in all, we remain confident in the company's present direction and in its ability to meet customer needs for advanced machinery and innovative services in the years ahead.â
Share prices
The equipment manufacturerâs common stock shares have climbed 1% since the beginning of the year. S&P 500 index has gained 3.5%. Trading in New York Stock Exchange on Thursday saw its shares climb by 0.54% to close at $89.46. But after-hours trading saw a 0.27% tumble to $89.22.
The shares carry a P/E ratio of 11.28 with Earnings per share of $7.93 at a current yield rate of 2.68%. Six of fifteen analysts polled by Zacks Investment Research give the stock a âHoldâ rating, while five analysts recommend a âSellâ.
