Deere reports income increase in third quarter, expects strong production

Dubuque County’s largest employer on Friday reported an increase in income in its recently completed quarter, and financial figures also ticked up for the division that includes John Deere Dubuque Works. 

Deere & Co. reported net income of about $1.88 billion for the third quarter of its fiscal year, which ended July 31. That marks a 13% increase from the same time period last year, when net income was $1.67 billion.

For the nine months of Deere’s fiscal year so far, net sales totaled about $37 billion, up 13% from the same period last year. 

During an earnings call with investors Friday, Deere officials said they are forecasting net income for fiscal year 2022 to be in the range of $7 billion to $7.2 billion, which would be a jump from $5.96 billion in net income in fiscal year 2021. 

“John Deere achieved higher production rates in the third quarter, despite ongoing supply chain challenges,” Rachel Bach, Deere & Co. manager of investor communications, said on the call. “Our order books are beginning to fill for 2023 products.”

Deere’s construction and forestry division, which includes John Deere Dubuque Works, reported an operating profit of $514 million in the third quarter, an 11% increase from the same period last year. 

The division’s operating profit for the first nine months of the fiscal year was $1.6 billion, up 31% from the same period last year.

The construction and forestry division also saw quarterly net sales of $3.27 billion, an 8% increase in net sales from last year’s third quarter. In the first nine months of the fiscal year, the division’s net sales increased 7% from last year, reaching $9.16 billion. 

“Construction and forestry continue to benefit from demand, contributing to the strong performance in the quarter,” Bach said. 

Deere & Co. Director of Investor Relations Brent Norwood said during the call that the number of partially-completed machines waiting for parts due to supply chain issues had decreased since the end of the second quarter. 

“We had great progress reducing the number of machines by roughly about a third,” he said. “The number of machines that we still have held as partially-completed inventory, for the most part, we’re looking at machines that need one or two parts before they’re ready to ship.”

Raj Kalathur, chief financial officer for Deere & Co., praised company employees on the call for getting products to consumers amid supply chain challenges. 

“As we look ahead, we plan to continue the momentum built in the third quarter to the fourth quarter and beyond,” he said. “Demand remains strong in multiple end markets, and we continue to see strong demand for our technologies and precision solutions. We will continue to unlock more value for customers, leaving our best years still to come.”