Deere Earnings Miss, Revenues Beat Estimates In Q1

Deere & Company (DE  - Free Report) reported first-quarter fiscal 2019 (ended Jan 28, 2019) adjusted earnings of $1.54 per share, missing the Zacks Consensus Estimate of $1.80 by a margin of 14%. However, the reported figure logged an improvement of 14% from the prior-year quarter’s earnings per share of $1.35. Notably, earnings improved despite the impact of material cost inflation. Further, concerns over tariffs and trade policies seem to be weighing on customer sentiment with farmers becoming cautious and subsequently delaying their equipment purchases.

Including one-time items, the company had incurred a loss of $1.66 in the prior-year quarter. There were no adjustments in the currently reported quarter.

Net sales of equipment operations (which comprise Agriculture and Turf, Construction and Forestry) came in at $6.9 billion, surging 16% year over year. Revenues beat the Zacks Consensus Estimate of $6.8 billion. Total net sales (including financial services and others) came in at $7.98 billion, up 16% year over year.

Deere & Company Price, Consensus and EPS Surprise

Deere & Company Price, Consensus and EPS Surprise

Deere & Company price-consensus-eps-surprise-chart | Deere & Company Quote

Operational Update

Cost of sales in the reported quarter advanced 16% year over year to $5.4 billion. Gross profit in the reported quarter came in at $2.55 billion, surging 16% year over year. Selling, administrative and general expenses increased 8% year over year to $764 million. Equipment operations reported operating profit of $577 million in the quarter under review compared with $419 million in the prior-year quarter.

Apart from the contribution from the Wirtgen acquisition, higher shipment volumes, price realization drove results. However, these gains were partially offset by higher production costs, higher warranty-related expenses and unfavorable effects of foreign currency exchange. Total operating profit (including financial services) increased to $769 million from $636 million reported in the year-ago quarter.

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