Deere & Company Sees Bright Outlook Amidst Challenging Markets
Despite a challenging and rapidly changing market environment, Deere & Company has finished the year with a better-than-expected fourth quarter. The company reported 13.1% margins for equipment operations in Q4, with full-year operating margins coming in at 18.2%. This reflects solid proactive execution throughout the organization.
In its fiscal year 2024 report, Deere & Company saw net sales and revenues drop by 16% to $51.7 billion, while net sales for equipment operations were down 19% to $44.8 billion. Net income attributable to the company was $7.1 billion or $25.62 per diluted share.
However, looking ahead to 2025, Deere & Company expects continued contraction of ag markets globally to result in ag and turf equipment demand at or below trough levels. Additionally, construction and forestry market demand is expected to be down as healthy end markets are offset by continued uncertainty in equipment purchases.
"We anticipate tougher year-over-year comps for PPA in the fourth quarter due to extended factory shutdown days associated with planned under production at several facilities," said Josh Rohleder, Manager, Investor Communications. "However, we're confident that our structural improvements will enable us to continue reinvesting in the business and delivering significant cash returns to shareholders."
Deere & Company's ability to generate just over $6.9 billion in operating cash flow from equipment operations is a testament to its resilience in a challenging market environment.
The company's individual business segments also saw significant changes, with production and precision ag business net sales down 38% compared to the fourth quarter last year. However, price realization was flat, and operating profit resulted in a 15.3% operating margin for the segment.
Turning to small ag and turf on Slide 6, Deere & Company reported net sales were down 25%, totaling $2.306 billion in the fourth quarter, primarily due to lower shipment volumes. However, this was partially offset by price realization.
Despite these challenges, Deere & Company remains optimistic about its future prospects. As the company continues to navigate a rapidly changing market environment, it's clear that its proactive approach and commitment to structural improvements will serve it well in the years to come."
