Boston, MA 02/13/2014 (wallstreetpr) – Boasting of a market cap of around $32.37 billion, Deere & Co (NYSE:DE) is one of the biggest operators in terms of providing solutions designed for the agricultural, construction, forestry, and financial industries. The company has just announced that it’s sales will suffer during the current quarter of 2014. The company says that the drop in sales is primarily because of the dire situation that farmers are going through at the moment. Farmers are not enjoying the sort of income that they need in order to invest in farming tools and equipment. Furthermore, the fact that crop prices will continue dropping around the nation, will also have a negative impact on DE’s sales.
When Deere & Co (NYSE:DE) released its first quarter financial results, it announced a 5 percent increase in net income. Normally, such news would create a buzz in the financial sector, but this never happened in the case of Deere & Co. The reason for this is that the company does not believe this increase will continue for much longer in 2014. During the past years when the company enjoyed higher sales, the reason for this was the fact that farmers were able to attract higher prices for their produce, and had the wherewithal to make purchases from Deere. The farmers had a high demand for Deere tractors and other farm equipment, which drove the company’s sales up.
Deere & Co (NYSE:DE) announced that it expects to see a 6 percent drop in the sale of large farm equipments in the next few months of 2014. It also expects to suffer a 3 percent drop in sales by the end of 2014. It seems that Deere & Co do not expect the farming sector to be good in 2014, as it has been in the past few years. By the end of this year, Deere expects to have made $3.3 billion in profits. However, although the outlook for 2014 is not so pleasant, Deere still expects to see the US economy picking up and doing much better than it has done in the last two to three years. If this happens, Deere might enjoy a much better 2014 than it projects.
According to Deere & Co (NYSE:DE)’s top executives, if the US economy picks up in the next few months, this will help its clients to purchase the larger equipment, which have higher margins. However, with all these negative trends and projections, it is remarkable that Deere still posted better first quarter financial results for 2014. The company announced a net income increase of 4.8 percent in the first quarter of 2014, compared to the same period in 2013. Under the current quarter, Deere posted $681 million in net income. For that reason, the company expects to continue posting solid performances throughout 2014, although not to the level it is accustomed to.
In summary, 2014 will not be the best of years in terms of financial results for Deere & Co (NYSE:DE), but the company still expects to post financial results that will not cause pain to investors.
