Ahead Of Deere's Q2 Results

(RTTNews) - Agricultural machinery maker Deere & Co. (DE) expects another challenging year in 2016, yet the level of performance could be much better than it experienced in previous downturns. Meanwhile, the company claims that its financial condition remains strong, and is continuing to forecast a healthy level of cash flow this year.

Also, the company believes it is well-positioned to continue looking to the future and making investments in innovative products, advanced technology and new markets.

The company is due to release its second-quarter numbers before the bell on Friday, May 20, with analysts polled by Thomson Reuters estimating earnings of $1.48 per share on revenue of $6.72 billion. Analysts' estimate typically exclude certain special items.

In the last quarter...

The company reported a 34% decline in profit, reflecting the continuing impact of the downturn in the global farm economy as well as weakness in construction equipment markets. Worldwide net sales and revenues for the first quarter decreased 13% from the prior year.

FY16 Outlook

Fiscal 2016 net income attributable to the company is now expected to be about $1.3 billion versus the previously communicated range of about $1.4 billion.

Company equipment sales are now projected to decrease about 10% for fiscal 2016 and to be down about 8% for the second quarter compared with the same period a year ago. Included in the forecast is a negative foreign-currency translation effect of about 3% for the full year and second quarter.

Previously, the company had expected Company equipment sales to decrease about 7% for fiscal 2016.

Fiscal-year 2016 net income attributable to Deere & Co. for the financial services operations is expected to be about $525 million. The outlook reflects less favorable financing spreads, an increased provision for credit losses and the unfavorable effects of foreign-currency exchange translation.

Q1 Overview

Net income attributable to the company for the first quarter ended January 31 2016 decreased to $254.4 million or $0.80 per share, from $386.8 million, or $1.12 per share for the same period of 2015. Analysts expected earnings of $0.70 per share for the quarter.

Worldwide net sales and revenues for the first quarter decreased 13% to $5.525 billion from $6.383 billion last year. Net sales of the equipment operations were $4.769 billion versus $5.605 billion a year ago. Wall Street expected revenues of $4.94 billion for the quarter.

Samuel Allen, chairman and chief executive officer said, "John Deere's first-quarter results reflected the continuing impact of the downturn in the global farm economy as well as weakness in construction equipment markets. At the same time, all of Deere's businesses remained solidly profitable, benefiting from the sound execution of our business plans and the success of actions to develop a more responsive cost structure."