Deere Reports Mixed Q2 Results, Slashes 2024 Net Income Outlook

Deere & Co DE shares are trading lower after the company reported second-quarter 2024 results and lowered its net income 2024 outlook.

The company’s net sales and revenue declined 12% year-over-year to $15.235 billion, beating the consensus of $13.281 billion.

Production & Precision Agriculture net sales declined 16% Y/Y to $6.581 billion, Small Agriculture & Turf net sales fell 23% to $3.185 billion, and Construction & Forestry revenue declined 7% to $3.844 billion due to lower shipment volumes.

Financial services revenues grew 26% Y/Y to $1.395 billion, and net income increased to $162 million from $28 million a year ago, reflecting higher average portfolio balances.

Deere stated that the quarterly results underscore sound execution despite challenging market conditions. Global agricultural and turf demand is softening further, while the construction industry remains stable.

Operating profit fell 20.5% Y/Y to $3.098 billion, and margin contracted by 208 bps to 20.3%.

EPS of $8.53, down from $9.65 YoY, beating the consensus of $7.87.

Segment operating margins: Production & Precision Agriculture 25.1%, down YoY from 27.7%; Small Agriculture & Turf 17.9%, down YoY from 20.5%; Construction & Forestry 17.4%, down YoY from 20.4%.

As of April 28, Deere held over $6.6 billion in cash and equivalents. DE’s net cash provided by operating activities for the quarter was $944 million, compared to cash used of $(147) million a year ago.

“We are proactively managing our production and inventory levels to adapt to demand changes and position the business for the future. Despite market conditions, we are committed to our strategy and are actively investing in and deploying innovative technologies, products, and solutions to ensure our customers’ success,” commented John C. May, chairman and chief executive officer. 

2024 Guidance: Deere lowered its 2024 net income outlook to $7.00 billion (prior $7.50 billion-$7.75 billion).

Deere expects 2024 Production & Precision Ag net sales to decline by ~20% -25% and price realization of +1.5%; Small Ag & Turf net sales to fall by 20%- 25% and price realization of +1.5%; and Construction & Forestry net sales to decrease by 5%- 10% and price realization of +1.5%.

The company expects Financial services net income of $770 million for the fiscal.

Price Action: DE shares traded lower by 6% at $389.01 premarket at the last check Thursday.

Photo via Wikimedia Commons