Deere & Company
CEO : Mr. John C. May II
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2024 Q3 | -26.7% YoY | -42.9% | -38.3% | 2024-11-21 |
Josh Jepsen says,
Overall Company Performance and Financial Metrics
- John Deere concluded Q4 2024 with 13.1% margins for equipment operations, contributing to full-year operating margins of 18.2%.
- For FY 2024, net sales and revenues decreased by 16% to $51.7 billion, while net sales for equipment operations fell 19% to $44.8 billion.
- Net income attributable to Deere and Company was reported at $7.1 billion, equating to $25.62 per diluted share.
Q4 2024 Segment-Specific Results
- Production and Precision Ag net sales were down 38% to $4.305 billion, with an operating margin of 15.3%.
- Small Ag and Turf net sales declined by 25% to $2.306 billion, and the operating margin for the segment was 10.1%.
- Construction and Forestry net sales decreased by 29% to $2.664 billion, resulting in an operating margin of 12.3%.
2025 Outlook and Guidance
- The company forecasts a 30% decline in large ag equipment sales in the US and Canada due to weak farm fundamentals and high interest rates.
- Production and Precision Ag net sales are anticipated to decrease by 15%, with operating margins expected between 17% and 18%.
- Small Ag and Turf net sales are projected to be down around 10%, with operating margins forecasted between 13% and 14%.
Regional Industry Outlooks
| Region | Expected Sales Change | Key Factors |
|---|---|---|
| US & Canada | -10% to -30% | Weak farm fundamentals, high interest rates, stagnant home sales |
| Europe | -5% to -10% | Depressed yields, reduced commodity prices, high input costs |
| South America | Flat | Stable conditions despite headwinds, improved sentiment |
| Asia | Slight decrease | Technology adoption, improved ag fundamentals in India |
Financial Services and Cash Flow Guidance
- Financial services net income for FY 2025 is forecasted to be $750 million, with improvements due to a lower provision for credit losses.
- Overall net income for FY 2025 is expected to range between $5 billion and $5.5 billion.
- Projected operating cash flow from equipment operations is between $4.5 billion to $5.5 billion.
Cory Reed says,
Canadian Market Impact
- The Canadian market, especially the western half, is seeing significant competitive conversions post the smart industrial redesign.
- The focus is on supporting primary production systems of small grains like wheat, canola, and barley.
- Efforts are centered on large-scale operations, which are benefiting from the tailored solutions provided.
Product Introductions
- New product introductions over recent years have been specifically designed for the Canadian market’s needs.
- Products such as X9 combines, high horsepower 9RX tractors, and C series air carts are highlighted as key innovations.
- These products are aimed at solving the toughest challenges of small grains customers at the system level.
Technology Solutions
- Integrated technology solutions are playing a crucial role in enhancing John Deere operations.
- These solutions focus on improving efficiency, profitability, and quality of life for customers.
- System-level value is created through innovative technologies, leading to increased customer satisfaction.
Dealer Network and Customer Commitment
- The dealer network is committed to investing in customer relationships and equipment efficacy.
- Efforts are directed at maximizing customer uptime and equipment reliability.
- This commitment results in exceptional system-level value for Canadian farmers.
Expected Impact on Stock Movement
| Factor | Impact | Time Period |
|---|---|---|
| Competitive Conversions | Positive | Immediate to Mid-term |
| New Product Adoption | Positive | Mid-term |
| Technology Integration | Positive | Long-term |
| Dealer Network Improvements | Positive | Continuous |
Q & A sessions,
Quarterly Performance and Inventory Management
- The quarter’s results exceeded expectations, with targeted reductions in field inventory, especially in North American tractors and combines.
- Production costs improved year-over-year due to better material and freight costs management.
- SIGN and R&D costs were controlled efficiently, contributing to cash flow outperformance.
- Significant underproduction was implemented globally, with a focus on maintaining low inventory-to-sales ratios.
Outlook for 2025 and Market Conditions
- Farm fundamentals are expected to remain depressed, with additional pressure from global stock rebuilding and anticipated record production in South America.
- Input costs are expected to remain flat, compressing farm net incomes globally.
- Machinery demand in the dairy and livestock segments lags despite positive margins due to interest rates and slow herd expansion.
- The company aims to produce in line with retail demand in North America in 2025.
Regional Performance and Production Adjustments
| Region | Inventory Reduction | 2025 Production Plans |
|---|---|---|
| North America | Combine inventory down mid-teens, 220+ HP tractors inventory halved | Align with retail demand |
| Brazil | Significant reductions achieved, except combines | Continue underproduction for combines in 2025 |
| Europe | Over 20% reduction, targets adjusted downward | Further underproduction in 2025 |
Financial Performance and Shareholder Returns
- EPS exceeded $25, marking the second-best level in company history.
- Returned over $5.6 billion to shareholders via dividends and share buybacks.
- Volume reductions in the market are expected to weigh on 2025 margins, with equipment down 13% for the full year.
- Positive price costs are anticipated across all segments, supported by favorable production costs.
Technological Advances and Strategic Investments
- Global engaged acres grew by nearly 20% in 2024, with South America up 30%.
- Adoption of ExactApply technology increased by over 10% year-over-year.
- Pay-per-use model led to higher adoption levels for precision technology solutions.
- Strong focus on R&D and new product capital spending continues to drive innovation.
- Precision Ag Essentials Kit saw over 8,000 units sold, reflecting a shift towards recurring licensing models.
No bad stock 