Deere’s Q2 Equipment Operations Revenue Reports 5.4% Growth

Deere’s second-quarter revenue

In the second quarter of fiscal 2019, Deere (DE) reported total revenue of $10.27 billion from its equipment operations, reflecting a rise of 5.4% year-over-year. In the second quarter of fiscal 2018, Deere reported revenue of $9.74 billion.

Deere continued the upward trend in its second-quarter revenue. Its second-quarter equipment operations revenue managed to beat analysts’ estimate of $10.18.

Deere’s Q2 Equipment Operations Revenue Reports 5.4% Growth

Deere’s equipment business growth was mainly driven by organic growth. Higher shipments and favorable pricing helped it report higher revenue. However, an unfavorable foreign currency exchange had a negative impact on Deere’s revenue.

Management’s comments

Samuel R. Allen, Deere’s chair and CEO, said, “John Deere produced solid results for the quarter despite uncertain conditions in the agricultural sector. Ongoing concerns about export-market access, near-term demand for commodities such as soybeans, and a delayed planting season in much of North America are causing farmers to become much more cautious about making major purchases. At the same time, overall economic conditions remain positive, a fact that along with a growing customer base has contributed to strong results from our construction and forestry business.”

Outlook

Deere expects the ongoing US-China trade war and delayed sowing to have an adverse impact on its revenue. As a result, Deere now expects its fiscal 2019 revenue to rise 5% compared to its earlier guidance of 7%.

Investors can hold Deere indirectly by investing in the VanEck Vectors Agribusiness ETF (MOO), which holds 7.0% in Deere. The fund also provides exposure to FMC (FMC), CNH Industrial (CNHI), and Tractor Supply (TSCO) with weights of 2.5%, 2.7%, and 3.6%, respectively, as of May 20.