Despite a decrease in sales and profits and a series of challenges brought about by the pandemic, Deere & Co. closed its fiscal year with high hopes about what the future holds.
The company today reported a 16% decline in fourth-quarter net sales in its construction and forestry division, which includes John Deere Dubuque Works. Quarterly sales were $2.46 billion, compared to $2.95 billion during the same quarter the previous year.
Operating profit was down 25%, to $196 million, during the most recent quarter, which concluded on Nov. 1.
For the entire fiscal year, the construction and forestry division had a 51% decline in operating profit and a 20% drop in net sales and revenues.
Manager of Investor Communications Brent Norwood emphasized that the division finished the challenging year on a positive note.
“Markets for our construction and forestry division improved in the fourth quarter, leading to a solid finish to the year and modest levels of recovery projected for fiscal year ’21,” he said.
Norwood’s upbeat assessment was reflected in the company’s official construction and forestry outlook for fiscal year 2021. The company projects that division sales will be up 5% to 10%.
This estimate was fueled by a combination of good and bad news, according to Norwood.
He noted that positive trends in the housing market and an expected increase in demand for lumber are encouraging signs for construction and forestry sales. However, continued uncertainty in the oil and gas sector has dampened expectations slightly for the fiscal year.
As a whole, Deere & Co. net sales were $35.5 billion in fiscal year 2020, down about 9% compared to the previous fiscal year. Net income was about $2.8 billion, which represented a slide of 15% compared to the previous fiscal year.
The company outlook for fiscal year 2021 shows an expected improvement, with net income expected to be in the range of $3.6 billion to $4 billion.
“It is important to note that constraints in the supply base and labor-force availability due to COVID-19 remain key risks to fiscal year 2021,” said Chief Financial Officer Ryan Campbell.
Despite these looming concerns, company officials said the fourth quarter provided reason for optimism.
Companywide net sales and revenues in the year’s final quarter were down just 2% compared to the same quarter the previous year, showing that the company was moving closer to normalcy.
Campbell applauded the workers for making that rebound a reality.
“Employees across our company logged extra hours and adapted to an ever-changing environment to create safe working conditions and ensure the supply of parts and equipment to our customers so they could continue their essential work,” he said.