MOLINE, Ill. - Deere & Co. reported Feb. 13, 2001, that higher sales and cost reductions helped boost its earnings by 50 percent in its first quarter. The turf and agricultural machinery manufacturer earned $56.4 million in the three months ending Jan. 31, 2001, up from $37.7 million a year earlier. Revenues for the quarter increased 15 percent to $2.7 billion from $2.3 billion in the same period last year.
During the quarter, the company completed the acquisitions of McGinnis Farms (see John Deere Acquires McGinnis Farms, Extends Market Reach in Green Industry) and Great Dane Power Equipment (see John Deere Acquires Great Dane Power Equipment Company). In combination with the company’s traditional strengths in equipment, customer service and financing, these acquisitions will help Deere provide total solutions to the rapidly growing commercial grounds-care and irrigation industries, said Robert Lane, Deere chairman and CEO.
“Our improved financial performance is a reflection of favorable customer response to our many new and innovative products and is especially gratifying in light of the economic weakness affecting our major markets,'' said Lane.
Operating profit of the Deere equipment divisions - which excludes interest, taxes and other corporate expenses - increased substantially to $70 million vs. $20 million for the year-ago period. The operating profit increase was mainly due to improved manufacturing efficiencies primarily related to higher sales and production volumes. Net income of the equipment operations - which includes interest, taxes and other corporate expenses -also increased to $4.1 million for the quarter, compared to a $5.1 million net loss last year.
First-quarter operating profit of the commercial and consumer equipment division - which includes lawn-care equipment and worksite and utility vehicles - was $1 million, compared with $9 million last year. Sales for the quarter declined 13 percent due in part to the planned implementation of a new order-fulfillment process to reduce field inventories as well as the effects of the weaker economy, according to the company. Higher sales-incentive costs also had an adverse impact on the division’s results.
Deere’s outlook for its commercial and consumer equipment division said that industry retail sales of commercial and consumer equipment are expected to decline by five to 10 percent this year as a result of the U.S. economic slowdown. However, Deere sales and financial results for this sector are expected to improve on the strength of profitability-enhancement initiatives and new products.
For more information about the company visit www.deere.com.
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