As expected, sales and profits fell in the third quarter for Deere and Company. Today it reported sales for May through July dropped 11 per cent, and net income fell to 489 million dollars, compared with 511 million for the same quarter last year - a drop of 4 1/2 per cent.
Spokesman Ken Golden says sales of Deere farm and landscape equipment decreased eleven percent in the third quarter, year over year. And the company predicts they'll drop eight per cent for the full year.We haven't changed our outlook since the second quarter. We believe all the markets are down. Sales in the U.S. and Canada especially are down. That's an important sector for us. And the large ag equipment market is soft at this point.
Adjusting to lower demand, the company will lay off 120 workers at the Deere Harvester combine factory in East Moline. The layoffs will take effect right after Labor Day.
Golden also says construction and forestry equipment sales dropped 24 per cent for the quarter. And several factors are affecting the market.Oil and gas, by contractors who don't have confidence in the market. And by rental utilization rates which are down. And the U.S. single-family housing starts aren't growing as rapidly as multi-family. Therefore, you don't need as much earth-moving equipment.
The company emphasizes it was still profitable, but felt the impact of the global farm recession and what it called "difficult conditions in construction equipment markets."
For the first nine months of the year, worldwide sales and revenue for Deere declined 9 per cent compared to the same period in 2015.
Despite that, Deere has raised its projection for full-year profits to 1.3 billion dollars, up from 1.2 in May.
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