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Riding High: Deere Had a Stellar Performance in 2Q17

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Part 2
Riding High: Deere Had a Stellar Performance in 2Q17 PART 2 OF 5

Deere Rode the South American Wave, Reported Higher Revenue

Deere’s fiscal 2Q17 revenue

Deere (DE) announced its fiscal 2Q17 earnings on May 19, 2017. It reported total revenue of $8.28 billion in 2Q17—an increase of 5.2% compared to $7.87 billion in 2Q16.

Deere Rode the South American Wave, Reported Higher Revenue

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Deere’s revenue growth was primarily driven by improved sales outside the US and Canada. Outside this region, its revenue grew 14% during 2Q17. Higher prices helped Deere increase its revenue 2%, while the foreign exchange translation hedge didn’t have a significant impact on Deere’s revenue.

Samuel R. Allen, Deere’s chairman and CEO, said, “John Deere reported strong results in the second quarter as market conditions showed signs of further stabilization. We are seeing modestly higher overall demand for our products, with farm machinery sales in South America experiencing a strong recovery. Deere’s performance also reflects the sound execution of our operating plans, the strength of a broad product portfolio, and the impact of our actions to develop a more agile cost structure. As a result, we have raised our forecast and are now calling for significantly higher earnings for the full year.”

Outlook

Strong demand in South America is expected to continue driving Deere’s growth. Demand in the US and Canada is expected to fall 5% for fiscal 2017. As a result, Deere expects its equipment sales to rise 9% for fiscal 2017 and 18% for fiscal 3Q17.

Investors can indirectly hold Deere by investing in the Agribusiness ETF (MOO), which has invested 7.3% of its portfolio in Deere. The fund’s top holdings include Syngenta (SYT), Monsanto (MON), and Zoetis (ZTS) with weights of 8.6%, 8.2%, and 7.5%, respectively, as of May 22, 2017.

In the next part, we’ll discuss how Deere’s Agriculture and Turf segment performed in fiscal 2Q17.

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