MOLINE, Ill. — Deere & Co. released its third quarter earnings report Thursday morning, beating analysts' expectations for profit, despite its decreasing sales.
The company brought in a net income of $1.734 billion for the third quarter, down from the $2.978 billion it made in its 2023 third quarter. Worldwide net sales and revenue decreased 17% for this quarter and 11% overall for the fiscal year. Sales fell across all three of Deere's categories in construction and agriculture. Deere projects sales to come in 10-25% lower across its categories for the fiscal year.
It maintained its forecast of $7 billion in net income for the year. It's the first quarterly report this year the company hasn't lowered that forecast. At the end of 2023, it was predicting a net income for fiscal year 2024 between $7.75 billion and $8.25 billion.
Despite the drop in sales, Deere beat analyst expectations with this report. LSEG estimated its third quarter net income would be $5.63 per share. It came out to $6.29 per share. The company's stock rose nearly 6.5% after Deere's announcement.
"Our customers across nearly all business segments are facing headwinds, including softer commodity prices and elevated interest rates," CEO John May said during the earnings report call. "Against this backdrop, I'm extremely proud of our team's unwavering commitment to an execution of our key priorities. They have navigated the business cycle through proactive inventory management and discipline cost control while continually striving to deliver value to our customers."
Deere has been slowing down its production because of the lack of demand.
In February, the USDA forecast net farm income will fall by $43.1 billion, about a 27% drop. Farm income had previously reached a record high in 2022 of $185.5 billion before decreasing 16%. Crop and animal product sales are also expected to generate $21 billion less this year.
"When we started to see some demand soften, we went back and looked at prior periods of where we saw the industry start to cycle downward or soften, and we saw a lot of mistakes that we made, and frankly, the industry made as well," May said. "We decided this time we were going to control what we can control... That's all about taking out inventories, under producing retail demand. It's all about taking out excess costs and restructuring the business to function in a much leaner environment. In the past that might have taken us two to two-and-a-half years to react. We reacted in the first quarter."
The company has laid off more than a thousand people across the company this year, both in its factories and its salaried workforce. May seemingly addressed those layoffs as part of the adjustments the company has made.
"We've made the challenging decisions that impact both our factories and our offices to ensure that our cost structure aligns with current market demand, and while these actions have been hard, and certainly not something we take lightly, they help us maintain our competitiveness throughout the business cycle," he said. "We've got to build high quality product and make sure that we're meeting our customers' needs, and then cost the business, structure the business in a way that allows us to be, continue to be profitable, and generate the money we need to continue to reinvest in our business, in our portfolio."
Deere reported a record net income of $10.166 billion in 2023. In 2022, the company made $7.131 billion.