Deere reports income decrease for recent quarter

Dubuque County’s largest employer on Friday reported a drop in net income for its most recent quarter, though the division that includes John Deere Dubuque Works had its operating profit increase.

Deere & Co. reported a net income of $903 million for the first quarter of its fiscal year, which ended Jan. 30. During the same period last year, that figure was $1.224 billion.

The construction and forestry division, which includes the Dubuque plant, saw operating profit increase 1% from the same period last year to $272 million. The division saw $2.544 billion in net sales and revenues during the quarter, an increase of 3% from the same period last year.

“Construction and forestry markets also continue to benefit from strong demand and price realization, contributing to the division’s solid performance in the quarter,” Brent Norwood, manager of investor communication, said during a quarterly earnings conference call.

Sales in the broader construction and forestry industry are expected to increase 5% to 10% over the course of the fiscal year in North America, with the compact construction market either flat or increasing up to 5% due to supply issues.

“Markets for earthmoving and compact equipment are expected to remain strong in our fiscal year ’22 forecasts, benefiting from continued strength in the housing market, increased activity in the oil and gas sector, as well as strong (capital expenditure) programs from the independent rental companies,” Norwood said.

Union members at Deere ratified a six-year agreement with the company in November, ending a five-week strike. Deere Chairman and CEO John C. May noted in a press release that the strike, COVID-19 pandemic and supply-chain issues resulted in higher production costs.

“Deere’s performance in the first quarter was impressive given production issues surrounding the delayed ratification of our (International Union, United Automobile, Aerospace and Agricultural Implement Workers of America) contract in late November as well as persistent challenges posed by the supply chain and pandemic,” he said in the release.

May said during the call that factories were able to ramp up production quickly during the quarter, which began during the strike.

“That is an amazing feat when you consider that many of our factories were down for five weeks because of work disruption,” May said. “The credit for this impressive performance goes first to factory employees who did an outstanding job post-ratification of our labor agreements and next to our dealers who have managed through delays due to both supply-chain challenges and work stoppages at our factories.”

Company officials said demand for their products outpaces supply in many areas.

“Fiscal year 2022 will be the second year in a row in which the industry demand has outstripped supply — that’s why we are already getting interest in our model year 2023 products,” May said.