John Deere hit by falling sales and predicts a further 10% decline in 2016 sales
John Deere has posted a decline in sales and revenues of 13% to $5.525 billion for the first quarter of its 2016 fiscal year.
The machinery manufacturer announced that it had first quarter earnings of $254m.
This compares to net income of $386.8m for the first quarter of 2015.
John Deere has attributed the results decline on weakness in global markets for farm and construction equipment.
The company announced however, that all businesses remain profitable, helped by sound execution and effective cost management.
Net sales of the equipment operations were $4.769 billion for the quarter compared with $5.605 billion a year ago.
Samuel R. Allen, Chairman and CEO of John Deere, said that the 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.
It posted net sales of the worldwide equipment operations declined 15% for the quarter and sales included price realisation of 2% and an unfavourable currency-translation effect of 4%.
Equipment net sales in the US and Canada decreased 18%, meanwhile, outside the US and Canada, net sales were down 9%, with unfavourable currency-translation effects of 11%.
John Deere expects company equipment sales 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.
For fiscal 2016, it anticipates net income attributable to Deere and Company is anticipated to be about $1.3 billion.
“This illustrates the impact of our efforts to establish a more durable business model and a wider range of revenue sources.
“As a result, the company’s financial condition remains strong and we are well-positioned to continue investing in innovative products, advanced technology and new markets.
“These actions, we’re confident, will provide significant value to our customers and investors in the years ahead.”