MOLINE, Ill. – Three years after suffering one of its worst years, Deere & Co. had its best.
The company today reported a record $1.4 billion in net income for its fiscal year that ended Oct. 31, just three years removed from suffering a $64 million annual loss. The final results eclipsed projections made in August of about $1.2 billion in earnings.
The company's previous record year was 1998, when it booked a little more than $1 billion on the tail end of a five-year run of record earnings.
This year's annual earnings were more than double last year's $643.1 million. Worldwide sales grew 29 percent to just under $20 billion.
For the fourth quarter, net income jumped 403 percent to $356.7 million, $1.41 a share, the 11th consecutive quarter of earnings growth. Sales were up 32 percent to $5.2 billion.
The company attributed the phenomenal growth to improving market conditions combined with its focus on efficient operations.
"We are winning new customers with exceptional products and services, while producing the kind of financial results that will reward investors over the long run," said CEO Robert Lane.
Agriculture equipment sales jumped 35 percent for the quarter and 31 percent for the year. Division operating profits skyrocketed, from $8 million to $267 million during the fourth quarter, and from $329 million to just over $1 billion for the full year.
Deere is predicting a worldwide sales increase of 2 to 5 percent for agriculture equipment for fiscal 2005. While Deere expects flat sales in Europe and a decline in South America, the company projects a 5 percent increase in North American sales due to record crop production, strong performance in the livestock sector and increased government payments.
Unlike the company's previous record year in 1998, in which a lackluster fourth quarter foretold a string of subsequent down years, business is still looking up for Deere.
The company projects equipment sales to increase 2 percent to 7 percent for 2005, with net income forecast to be around $1.5 billion. First-quarter equipment sales are currently forecast to be up 20 to 25 percent in comparison with the same period last year. Production levels are expected to increase by 11 to 13 percent for the quarter. Net income for first-quarter 2005 is forecast to be in a range of $200 million to $225 million, which would be 17 percent to 32 percent higher than the first quarter of 2004.
"We remain focused on offering innovative products and services, while introducing our brand to a wider global audience," said Lane. "We're confident our efforts to build – and grow – a great business are well on track and will produce strong results in 2005 and the years beyond."
Lane was appointed CEO in 2000 in the midst of those down years. During an appearance in Waterloo in August, he shared with business leaders his blueprint for turning the company around.
"Our business wasn't as consistently great as it could be. We were asset heavy and margin lean," Lane said during a speech at Hawkeye Community College. "Recognizing our well-earned reputation for great products, I began focusing on a strategy to build a business as great as our products, a business that would be aimed at generating higher returns in all economic cycles."