Farm equipment maker Deere & Co. (DE) is scheduled to announce fourth-quarter results before the market opens on Wednesday. On average, 20 analysts polled by Thomson Reuters expect the company to earn $0.03 per share for the quarter with estimates ranging between a loss of $0.12 per share and earnings of $0.25 per share. Revenues are estimated to be $4.44 billion. Analysts' estimates typically exclude special items.
While announcing the third-quarter results in August, Deere said its fourth-quarter results would be affected by significant production cutbacks that are being made in line with retail demand. Voluntary employee separations related to the new organizational structure are expected to result in pretax charges of about $85 million in the fourth quarter, the company had noted. Deere further projected equipment net sales to be down about 34% for the fourth quarter.
A month later, Deere said it would take a $300 million impairment charge in the fourth quarter related to reduction in the value of the John Deere Landscapes reporting unit due to weak economic conditions.
The Moline, Illinois-based company operates in four business segments - agricultural equipment segment, commercial and consumer equipment segment, construction and forestry segment and credit segment. For the fiscal year ended October 31, 2008, agricultural equipment segment generated over 58% of the company's total revenues, and commercial and consumer equipment segment brought in over 15% of the total amount. Revenue from construction and forestry segment amounted to nearly 17% of the total, and credit segment generated nearly 8% of annual revenues.
The global economic crisis has led to a decline in demand for Deere's products, especially in farming and construction. In August, Deere reported a 27% decline in profit for the third quarter, mainly hurt by lower shipment and production volumes, and the unfavorable effects of foreign exchange. Third-quarter net income was $420.0 million or $0.99 per share, lower than net income of $575.2 million or $1.32 per share reported in the corresponding quarter last year. Deere's total net sales and revenues in the quarter dropped 24% to $5.89 billion from $7.74 billion a year ago.
For the fourth quarter ended October 31, 2008, the company reported net income of $345.0 million, or $0.81 per share. Worldwide net sales and revenues for the quarter were $7.401 billion.
Among events during the latest period, in early September, Deere decided to indefinitely layoff 367 manufacturing employees of the John Deere Harvester Works in East Moline, effective September 21 due to reduced market demand for the factory's products.
The company said in late October that it is recalling majority of the manufacturing workers laid off at the John Deere Ottumwa Works factory in Iowa earlier this year to begin production at its new 2010 line of equipment. It was on June 2 that the company said it would lay off majority of its production employees at the John Deere Ottumwa Works until later this year, citing economic conditions and slumping demand for its products. However, Deere added in October that 78 workers would remain on layoff until market conditions improve enough to require the additional workforce.
Last month, construction and mining equipment maker Caterpillar Inc. (CAT) reported a 53% drop in profit for the third quarter, hurt by lower machinery and engine sales. The company reported net income of $404 million, or $0.64 per share for the third quarter, a sharp decline from $868 million, or $1.39 per share, in the year-ago quarter. Total sales and revenues for the third quarter were $7.30 billion, down 44% from $12.98 billion in the year-ago period.
For fiscal 2009, Deere expects net income to be about $1.1 billion, despite the largest expected single-year sales decline in at least 50 years. The company expects equipment sales to be down about 21% for the full year. Analysts expect Deere to earn $2.61 per share on revenues of $20.40 billion.
For the fiscal year ended October 31, 2008, the company's net income was $2.053 billion, or $4.70 per share. Worldwide net sales and revenues for the year were $28.438 billion.
DE closed Tuesday's regular trade at $52.29, up $0.44 or 0.85%, on 8.44 million shares. For the past year, the stock traded in the range of $24.51-$53.59.
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