Deere & Company (DE) Q4 2014 earnings summary

Executive summary

• FY14 net sales and revenues fell 5% YoY to $36.067B; net income attributable to Deere & Company was $3.162B, down 11%, with diluted EPS of $8.63, down 5%.

• Net income remained the second-highest level in company history; operating cash flow was $3.526B.

Financial highlights

• Equipment operations sales declined 6% to $32.961B; operating profit fell 15% to $4.297B, reflecting lower volumes, weaker mix, FX and higher emissions-related production costs, partly offset by pricing.

• Consolidated cost of sales was 75.2% of net sales in FY14 versus 73.3% in FY13, pressured by mix, FX and emissions-related costs, partly offset by price realization.

• Financial Services net income reached a record $624M, up from $565M; financed receivables and leases grew 8% to nearly $40B.

Outlook and guidance

• FY15 net income attributable to Deere & Company was forecast at about $1.9B; equipment sales were projected down about 15% for the year and 21% in Q1 YoY.

• Worldwide Agriculture & Turf sales were forecast to fall about 20% in FY15; Construction & Forestry sales were expected to rise about 5%.

• FY15 Financial Services net income was expected to be approximately $610M, with higher credit-loss provisions and a less favorable tax rate partly offset by portfolio growth and improved crop insurance margins.

• Equipment capital expenditures were estimated at $875M for FY15, down from $1.045B in FY14.