Sales of Deere & Company (NYSE:DE) Declines; Annual Outlook Cut

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By Stefan Larson on August 14, 2014 Consumer Staples

On August 13, 2014, Deere & Company (NYSE:DE) reported its not-so-impressive quarterly profits and cut down its annual outlook. The company had to cut its guidance outlook for there has been a decrease in the sales of its harvesters, tractors and other agricultural equipments because of a decline in the prices of grain.

Deere & Company (NYSE:DE), the biggest farm equipment maker in the whole wide world, said that it now expects the profits to reach the figures of $3.1 billion for the current fiscal year. It is pertinent to note here that the company was previously expecting total profits of $3.3 billion.

Deere & Company (NYSE:DE) further commented that it expects the farm cash receipts of the United States region to fall down to $387.1 billion from a previously held 2013 figures of $407.1 billion. The company had previously expected the cash receipts to come down to $392.7 billion: cash receipts are closely linked with financing and investment in the agricultural machinery.

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An Analyst of JP Morgan, Ann Duignan, said that Deere & Company (NYSE:DE) released its adjusted forecast one day after the release of the estimates of World Agricultural Supply and Demand submitted by the United States Department of Agriculture. According to the analyst, the forecast of Deere & Company (NYSE:DE) still looked bullish.

The Agriculture Department estimates the production of corn to go up to 14 billion bushel units. This is the highest production that the country will see during the current fiscal year. The Department further announced that the production of soybean crop will increase by 16 percent and reach the record high figures of 3.82 billion bushel units.

The prices of soybean and corn have gone down due to the bumper crop prospect, and this has, consequently, discouraged the farmers to invest further in their agricultural operations and new equipments.

Deere & Company (NYSE:DE) also reduced its outlook for the region of South America as the sales are also down in that region due to the higher Brazilian interest rates and the tight Argentinean credit figures.

The company announced that it expects the sales to fall down by 15 percent during the current fiscal year; previously, the company expected the decline to touch the figures of 10 percent.

William Blair & Co.’s analyst, Lawrence De Maria, said that the reduced outlook of Deere & Company (NYSE:DE) suggests that no company is immune to the damaging and declining fundamentals of the industry segments.

Moreover the company said that the sales in the region of Soviet Union countries will also go down due to the geopolitical instability of those countries.

Deere & Company (NYSE:DE), on last trading day, August 13, 2014, started its stock prices at $85.51 and ended at a decreased price of $84.49. The intraday range for the company’s stocks was recorded to be from $84.37 to $86.98. Deere & Company (NYSE:DE) has a market cap of 31.47 billion with ratio for Price to Earnings of 9.24. As far as the dividend yield of the company goes, it has been reported that the figure is somewhere close to 2.84 percent.