Dubuque County’s largest employer on Friday reported an increase in income in its second quarter, and operating profit soared for the division that includes John Deere Dubuque Works.
Deere & Co. reported net income of about $2.1 billion for the second quarter of its fiscal year, which ended May 1. That represents an increase from the same time period last year, when net income was $1.8 billion.
In the first six months of Deere’s fiscal year, net sales totaled $22.9 billion, up 8% from the same period last year.
However, Deere & Co. officials said the company continues to be affected by supply-chain challenges.
“Reflecting on the second quarter results … the supply-chain-related constraints continued through the quarter and are not likely to abate through the fiscal year,” said Chief Financial Officer Ryan Campbell.
The construction and forestry division, which includes John Deere Dubuque Works, reported an operating profit of $814 million in the second quarter, a 66% increase from the same period last year.
In addition, the division’s operating profit for the first six months of the fiscal year was up 44% from the same period last year to $1.1 billion.
The construction and forestry division also had a 9% increase in net sales from last year’s second quarter to $3.35 billion. In the first six months of the fiscal year, the division’s net sales increased 6% from last year to $5.9 billion.
Following the earnings call, Deere & Co. Director of Investor Relations Brent Norwood said net sales in the construction and forestry division are expected to be up 10% to 15% during this fiscal year.
Norwood also said production rates are expected to be higher in the third and fourth quarters.
“Demand has been really strong since the beginning of the year,” he said. “We’ve been ramping up production ever since the first quarter. … Our order books extend through the year, so all the orders are there in the back half of the year. And in some product lines, we’re starting to take orders for fiscal year 2023. That gives you a little idea on how robust the environment is.”
On the call, Norwood said the number of production days have increased over the past several months. Some factories were affected by shutdowns in October, he said.
October marked the beginning of a five-week strike by Deere union members, including at the Dubuque facility, before a six-year agreement with the company was ratified in November.
Norwood said the biggest challenge of the second quarter was the number of partially-completed machines related to ongoing supply chain issues.
“The first quarter was affected by omicron. The second quarter was affected by global events and (COVID-19) lockdowns in China,” Norwood said on the call. “When we think about the rest of the year, we expect to see that continue a bit. … But we think conditions do support the production schedule. We do feel that we can get the parts that we need.”