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John Deere & Company stunned Wall Street with its second-quarter earnings.
The well-known reported worldwide net income of $256.9 million, or $1.07 per share, for the quarter ending April 30. That's an increase of more than 80 percent over last year's second quarter net income of $141.8 million, or $0.59 per share. For the first six months, net income was $324.9 million, or $1.35 per share, more than triple last year's six-month net income of $103.6 million, or $0.43 per share.
"Increased profitability of our construction and forestry and our commercial and consumer equipment operations contributed to the strong second quarter, asserted Robert W. Lane, chairman and CEO. "Even though the domestic farm-equipment sector remained weak, our improvement initiatives, as well as increased sales outside of North America, helped drive higher agricultural equipment profits. These results are further evidence that John Deere employees worldwide are executing the strategies necessary to build a better business."
Worldwide net sales and revenues grew 10 percent to $4.400 billion for the second quarter as compared to a year ago and increased 11 percent to $7.194 billion for the first six months. Net sales were $3.867 billion for the quarter and $6.141 billion for six months, compared with $3.409 billion and $5.347 billion last year.
Net sales increased due primarily to higher physical volumes in all three major equipment divisions. Additionally, currency exchange rates and price realization had a favorable impact on this year's sales. Compared with last year, overseas sales increased 22 percent for the quarter and 21 percent for the first six months. Excluding the impact of changes in currency exchange rates, the increases in overseas sales were 10 percent and 11 percent, respectively, due primarily to higher agricultural equipment sales.
Deere's equipment operations reported operating profit of $339 million for the quarter and $382 million for the first six months of 2003, compared with $217 million and $82 million last year. (Operating results exclude the impact of external interest expense, taxes and certain other corporate expenses.) The increases for both periods were primarily due to improved price realization as well as higher sales and production volumes and related manufacturing efficiencies.
The absence of goodwill amortization this year had a favorable pretax impact of $14 million for the quarter and $28 million for the first six months. Additionally, results for both the quarter and the year-to-date benefited from the impact of translating the foreign earnings at higher exchange rates. Partially offsetting these factors was a pretax increase in postretirement benefit costs of $69 million for the quarter and $143 million for the first six months.
These same factors mentioned above also led to Deere's equipment operations achieving net income of $181.6 million for the quarter and $176.4 million for the first six months, compared with net income of $94.9 million and a net loss of $15.6 million for the respective periods last year.