Deere & Company Reports 17% Decline in Revenue and 42% Drop in Net Income for Q3 2024

Deere & Company reported its financial results for the third quarter of fiscal year 2024, ending July 28, 2024, revealing significant declines in both revenue and profitability compared to the same period in the previous year. Net sales for the quarter totaled $13,152 million, a decrease of 17% from $15,801 million in the third quarter of 2023. For the nine-month period, net sales were $40,572 million, down 11% from $45,839 million in the prior year.

The decline in revenue was attributed to lower shipment volumes across key segments, particularly in Production and Precision Agriculture, which saw a 25% drop in net sales to $5,099 million, down from $6,806 million. Small Agriculture and Turf and Construction and Forestry segments also experienced declines of 18% and 13%, respectively. Conversely, Financial Services reported a 21% increase in revenue, reaching $1,489 million.

Net income attributable to Deere for the third quarter was $1,734 million, a 42% decrease from $2,978 million in the same quarter of 2023. For the nine-month period, net income fell 25% to $5,855 million from $7,797 million. Basic earnings per share for the third quarter were $6.32, down from $10.24, while diluted earnings per share decreased to $6.29 from $10.20.

Total operating profit for the third quarter was $2,297 million, reflecting a 35% decline from $3,516 million in the same period last year. The decrease in operating profit was primarily due to lower shipment volumes and expenses related to employee-separation programs, although partially offset by price realization and reduced warranty expenses.

Deere's total assets increased to $107,841 million as of July 28, 2024, up from $104,087 million at the end of the previous fiscal year. The company also reported a rise in deferred revenue, which reached $1,895 million, compared to $1,753 million a year earlier.

Strategically, Deere has been active in restructuring its operations, including the classification of its financial services business in Brazil as held for sale, which resulted in a reversal of credit loss allowances. The company also implemented employee-separation programs with estimated pretax expenses of approximately $150 million, expected to yield annual savings of about $230 million.

Looking ahead, Deere anticipates a continued decline in production volumes due to reduced demand in the agricultural and construction sectors, influenced by factors such as lower commodity prices and rising interest rates. The company plans to align production with retail demand to mitigate these challenges.