Deere's Sales Grow 37% as Shipments Rise

Deere & Company reported that its sales soared by 37% in the fourth quarter of the fiscal year, as supply constraints eased and the company was able to ship more of its farm and construction equipment. This increase in sales is a positive sign for the company, indicating that demand for its products remains strong.

The Moline, Ill.-based company said that demand for its products held up as it raised prices on farm equipment. The company forecast sales gains in the year ahead, citing strong demand and increased investment in infrastructure projects by the Biden administration. Elevated crop prices have kept farmers interested in new machinery even as their own production expenses increase.

Sales for the fiscal fourth quarter rose to $15.54 billion, which was higher than what Wall Street analysts had expected ($13.44 billion). The company attributed the increase to higher prices and more shipments across all of its segments, which offset higher production costs and the effects of the strong U.S. dollar. Costs for the quarter rose 30% to $12.65 billion.

Deere's stock prices rose by 5% to $438.31 during premarket trading. Up to Tuesday's close, the stock has risen by 21% this year.

Deere is forecasting continued growth for fiscal 2023. In its large farm equipment segment, sales are expected to grow by 15% to 20%. Sales of its construction and timber harvesting equipment are expected to rise by about 10%. Sales of its small farm machinery and landscaping equipment are slated to be up to 5% higher.

The company said that it expects price increases across all segments to more than offset the negative effects of the strong U.S. dollar. Profit for the year ahead is expected to be between $8 billion and $8.5 billion, up from $7.13 billion in fiscal 2022.

Deere's profit from small farm machinery and landscaping equipment rose 46% in the three months ended Oct. 30, while sales from that business rose 26%. The company attributed the increases to higher shipments and prices.

The company's biggest segment, large farm equipment, saw profits surge 124% during the quarter while sales rose 59%. Sales of construction and timber harvesting equipment climbed 20% as profit increased by 53%.

The company reported that its net income for the most recent quarter rose to $2.25 billion, or $7.44 per share. This is up from $1.28 billion, or $4.12 per share, during the same quarter last year. Analysts polled by FactSet were expecting per-share earnings of $7.11.