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The agricultural world is filled with struggles these days, as has been the case for the last few years. No one has felt the impact of this soft market more than John Deere, given its traditional stronghold on the farmer customer.
As the equipment manufacturer closed its books on the first quarter of 2003, little changed in terms of ag sales, but the rest of John Deere's business showed significant improvement over last year. Sales for the quarter totaled nearly $2.8 billion, compared to slightly more than $2.5 billion for the same three-month period last year. This sales spike, combined with the company's increased focus on controlling costs, resulted in a net income of $68 million for the quarter, which represented a more than $100-million improvement over last year's $38 million loss.
The company's Commercial and Consumer Equipment division, which includes its products sold to landscape contractors, enjoyed a 35 percent bump in sales over last year while production values more than doubled. Last year, John Deere and many of its manufacturing compatriots suffered from excessive field inventories that were bloated due to poor sales figures at the end of 2001. These manufacturers generally focused on controlling production levels throughout 2002 to bring field inventory levels under control, thereby creating demand going forward.
New product introductions, particularly its 100 Series lawn tractor that is being sold to consumers via Home Depot, also drove the sales increase and helped put the operating income on the positive side of the ledger – $23 million vs. a $43-million loss last year.
The company is confident that this strong performance will continue, predicting 10 to 15 percent growth in net equipment sales over last year for the second quarter.
The company's stock closed on Mar. 7 at $40.31 a share, down roughly 20 percent from its 52-week high of $51.60, which it hit in late November.
The author is Editor/Publisher for Lawn & Landscape magazine and can be reached at bwest@lawnandlandscape.com.