Deere Q4 Earnings Top Estimates, Sales Fall Y/Y on Low Volumes

Deere & Company DE reported fourth-quarter fiscal 2024 (ended Oct. 27) earnings of $4.55 per share, beating the Zacks Consensus Estimate of earnings of $3.90. The bottom line decreased 45% from the prior-year quarter.

The downside was mainly led by lower shipment volumes across all segments, reflecting weak demand. It was somewhat negated by the company’s pricing strategies and lower production expenses.

Deere & Company Price, Consensus and EPS Surprise

Deere & Company price-consensus-eps-surprise-chart | Deere & Company Quote

Net sales of equipment operations (comprising Agriculture & Turf, Construction & Forestry) were $9.28 billion, down 32.8% year over year. Sales topped the Zacks Consensus Estimate of $9.15 billion. Total net sales (including financial services and others) were $11.14 billion, down 27.7% year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Deere’s Q4 Operational Update

The cost of sales in the reported quarter moved down 30.3% year over year to $6.57 billion. Total gross profit decreased 38.2% year over year to $2.70 billion. Selling, administrative and general expenses rose 2.4% to $1.23 billion from the year-ago quarter.

Total operating profit (including financial services) declined 52.1% year over year to $1.45 billion in the fiscal fourth quarter.

DE’s Q4 Segment Performance

The Production & Precision Agriculture segment’s sales declined 38% year over year to $4.31 billion. The figure beat our model’s estimated revenues of $4.03 billion for the quarter. The downside was led by lower shipment volumes.

Operating profit decreased 64% year over year to $657 million due to lower shipment volumes/sales mix, partially negated by reduced production expenses. Our estimate for the segment’s operating profit was $543 million.

Small Agriculture & Turf sales were down 25% year over year at $2.31 billion on low shipment volumes, somewhat offset by price realization. Our projection for the segment’s sales was $2.11 billion. Operating profit declined 47% year over year to $234 million. The figure was higher than our estimate for an operating profit of $147 million for the segment.

Construction & Forestry sales were $2.66 billion, down 29% year over year on lower shipment volumes. The figure lagged our projection of $2.92 billion. Operating profit decreased 36% year over year to $328 million due to lower shipment volumes/sales mix, partially negated by lower production expenses. Our estimate for the segment’s operating profit was $301 million.

Revenues in Deere’s Financial Services division were $1.52 billion in the reported quarter, up 13% year over year. The figure was higher than our estimate of $1.42 billion. The segment’s operating income was $231 million in the quarter under review, up from $229 million in the prior-year quarter. Our projection was $250 million for the quarter.

Net income for Financial services declined 9% year over year to $173 million in the fourth quarter of fiscal 2024.

Deere’s Q4 Cash & Debt Position

Deere reported cash and cash equivalents of $7.32 billion at the end of fiscal 2024 compared with $7.46 billion at fiscal 2023 end. Cash flow from operating activities was $9.23 billion in fiscal 2024 compared with $8.59 billion in the prior fiscal year.

At the end of fiscal 2024, DE’s long-term borrowing was $43.23 billion compared with $38.48 billion at fiscal 2023 end.

DE’s FY24 Performance

The company reported earnings per share of $25.62 in fiscal 2024, 26% lower than earnings of $34.63 in fiscal 2023. It beat the Zacks Consensus Estimate of earnings of $25.00.

Net sales of equipment operations (comprising Agriculture and Turf, Construction, and Forestry) decreased 19.4% year over year to $44.76 billion, which beat the consensus estimate of $44.63 billion. Total net sales (including financial services and others) were $51.72 billion, down 16% year over year.

Deere’s FY25 Guidance

Deere expects net income for fiscal 2025 between $5 billion and $5.5 billion.

Net sales for Production & Precision Agriculture are expected to decline 15% year over year in fiscal 2025. Sales of Small Agriculture & Turf are expected to drop 10%. Sales of Construction & Forestry are projected to move down 10-15%. The Financial Services segment’s net income is expected to be $750 million.

DE’s Share Price Performance

Deere’s shares have gained 10.8% in the past year compared with the industry’s 8.3% growth.

Zacks Rank

Deere currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performances of Other Farm Equipment Stocks

Let us take a look at how other farm equipment stocks fared in their earnings releases.

Lindsay Corporation LNN delivered adjusted earnings per share of $1.17 in fourth-quarter fiscal 2024 (ended Aug. 31. 2024), beating the Zacks Consensus Estimate of $1.04. However, the bottom line fell 33% year over year.

The company generated sales of $155 million, down 7% from $167 million in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $154 million.

CNH Industrial N.V. CNH came out with third-quarter 2024 earnings of 24 cents per share, missing the Zacks Consensus Estimate of 28 cents. This compares with earnings of 42 cents a year ago.

CNH posted sales of $5.65 billion for the quarter ended September 2024, missing the Zacks Consensus Estimate of $4.78 billion. The top line decreased 22.3% year over year.

AGCO Corporation AGCO delivered adjusted earnings per share of 68 cents in third-quarter 2024, missing the Zacks Consensus Estimate of $1.07. The bottom line fell 83% year over year. Low commodity prices and elevated input expenses impacted equipment demand in the quarter.

AGCO’s sales decreased 24.8% year over year to $2.6 billion in the September-end quarter. The top line missed the Zacks Consensus Estimate of $2.9 billion. Excluding the unfavorable currency-translation impacts of 0.6%, net sales fell 24.2% year over year.

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