Quarterly results underscore sound execution in the face of challenging market conditions. Global agricultural and turf demand further softens while the construction industry remains stable. Full-year net income forecast updated to approximately $7.0 billion. MOLINE, Ill., May 16, 2024 /CNW/ -- Deere & Company (NYSE:DE) reported net income of $2.370 billion for the second quarter ended April 28, 2024, or $8.53 per share, compared with net income of $2.860 billion, or $9.65 per share, for the quarter ended April 30, 2023. For the first six months of the year, net income attributable to Deere & Company was $4.121 billion, or $14.74 per share, compared with $4.819 billion, or $16.18 per share, for the same period last year. Worldwide net sales and revenues decreased 12 percent, to $15.235 billion, for the second quarter of 2024 and decreased 9 percent, to $27.420 billion, for six months. Net sales were $13.610 billion for the quarter and $24.097 billion for six months, compared with $16.079 billion and $27.481 billion last year. "John Deere's second-quarter results were noteworthy in light of continued changes across the global agricultural sector," stated John C. May, chairman and chief executive officer. "Thanks to the dedication and hard work of our team, we continue to demonstrate structurally higher performance levels across business cycles and are benefitting from stability in construction end markets amid declining agricultural and turf demand." Company Outlook & Summary Net income attributable to Deere & Company for fiscal 2024 is forecasted to be approximately $7.0 billion. "We are proactively managing our production and inventory levels to adapt to demand changes and position the business for the future," May explained. "Despite market conditions, we are committed to our strategy and are actively investing in and deploying innovative technologies, products, and solutions to ensure our customers' success." Deere & Company Second Quarter Year to Date $ in millions, except per share amounts 2024 2023 % Change 2024 2023 % Change Net sales and revenues $ 15,235 $ 17,387 -12 % $ 27,420 $ 30,038 -9 % Net income $ 2,370 $ 2,860 -17 % $ 4,121 $ 4,819 -14 % Fully diluted EPS $ 8.53 $ 9.65 $ 14.74 $ 16.18 Prior period results were affected by a special item. See Note 1 of the financial statements for further details. Production & Precision Agriculture Second Quarter $ in millions 2024 2023 % Change Net sales $ 6,581 $ 7,822 -16 % Operating profit $ 1,650 $ 2,170 -24 % Operating margin 25.1 % 27.7 % Production and precision agriculture sales decreased for the quarter as a result of lower shipment volumes, partially offset by price realization. Operating profit decreased due to lower shipment volumes and higher production costs, partially offset by price realization.   Small Agriculture & Turf Second Quarter $ in millions 2024 2023 % Change Net sales $ 3,185 $ 4,145 -23 % Operating profit $ 571 $ 849 -33 % Operating margin 17.9 % 20.5 % Small agriculture and turf sales decreased for the quarter as a result of lower shipment volumes, partially offset by price realization. Operating profit decreased due to lower shipment volumes, partially offset by price realization.   Construction & Forestry Second Quarter $ in millions 2024 2023 % Change Net sales $ 3,844 $ 4,112 -7 % Operating profit $ 668 $ 838 -20 % Operating margin 17.4 % 20.4 % Construction and forestry sales decreased for the quarter due to lower shipment volumes. Operating profit decreased due to lower shipment volumes and higher SA&G and R&D expenses.   Financial Services Second Quarter $ in millions 2024 2023 % Change Net income $ 162 $ 28 479 % Financial services net income for the quarter increased due to income earned on higher average portfolio balances, partially offset by a higher provision for credit losses and less-favorable financing spreads. The results of the prior period were also affected by a correction of the accounting treatment for financing incentives offered to John Deere dealers. The cumulative effect of this correction, $173 million pretax ($135 million after-tax), was recorded in the second quarter of 2023. Industry Outlook for Fiscal 2024 Agriculture & Turf U.S. & Canada: Large Ag Down ~ 15% Small Ag & Turf Down ~ 10% Europe Down ~ 15% South America (Tractors & Combines) Down 15 to 20% Asia Down moderately Construction & Forestry U.S. & Canada: Construction Equipment Flat to Down 5% Compact Construction Equipment Flat Global Forestry Down ~ 10% Global Roadbuilding Flat to Down 5%   Deere Segment Outlook for Fiscal 2024 Currency Price $ in millions Net Sales Translation Realization Production & Precision Ag Down 20% to 25% ~ Flat +1.5 % Small Ag & Turf Down 20% to 25% ~ Flat +1.5 % Construction & Forestry Down 5% to 10% ~ Flat +1.5 % Financial Services Net Income ~$  770 Financial Services. Fiscal-year 2024 net income attributable to Deere & Company for the financial services operations is forecasted to be approximately $770 million. Results are expected to be higher than fiscal year 2023 due to income earned on a higher average portfolio, partially offset by a higher provision for credit losses and less-favorable financing spreads. A correction of the accounting treatment for financing incentives offered to John Deere dealers impacted 2023 financial results. The cumulative effect of this correction, $173 million pretax ($135 million after-tax), was recorded in the second quarter of 2023. FORWARD-LOOKING STATEMENTS Certain statements contained herein, including in the section entitled "Company Outlook & Summary," "Industry Outlook," and "Deere Segment Outlook," relating to future events, expectations, and trends constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 and involve factors that are subject to change, assumptions, risks, and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect all lines of the company's operations generally while others could more heavily affect a particular line of business. Forward-looking statements are based on currently available information and current assumptions, expectations, and projections about future events and should not be relied upon. Except as required by law, the company expressly disclaims any obligation to update or revise its forward-looking statements. Many factors, risks, and uncertainties could cause actual results to differ materially from these forward-looking statements. Among these factors are risks related to: changes in and compliance with U.S., foreign and international laws, regulations, and policies relating to trade, economic sanctions, data privacy, spending, taxing, banking, monetary, environmental (including climate change and engine emissions), and farming policies; political, economic, and social instability of the geographies in which the company operates, including the ongoing war between Russia and Ukraine and the conflict in the Middle East; adverse macroeconomic conditions, including unemployment, inflation, rising interest rates, changes in consumer practices due to slower economic growth, and regional or global liquidity constraints; worldwide demand for food and different forms of renewable energy; the ability to execute business strategies, including the company's Smart Industrial Operating Model, Leap Ambitions, and mergers and acquisitions; the ability to understand and meet customers' changing expectations and demand for John Deere products and solutions; accurately forecasting customer demand for products and services and adequately managing inventory; the ability to integrate new technology, including automation and machine learning, and deliver precision technology and solutions to customers; changes to governmental communications channels (radio frequency technology); the ability to adapt in highly competitive markets; dealer practices and their ability to manage distribution of John Deere products and support and service precision technology solutions; changes in climate patterns, unfavorable weather events, and natural disasters; governmental and other actions designed to address climate change in connection with a transition to a lower-carbon economy; higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for John Deere products and solutions; availability and price of raw materials, components, and whole goods; delays or disruptions in the company's supply chain; our equipment fails to perform as expected, which could result in warranty claims, post-sales repairs or recalls, product liability litigation, and regulatory investigations; the ability to attract, develop, engage, and retain qualified personnel; security breaches, cybersecurity attacks, technology failures, and other disruptions to John Deere information technology infrastructure and products; loss of or challenges to intellectual property rights; legislation introduced or enacted that could affect the company's business model and intellectual property, such as right to repair or right to modify legislation; investigations, claims, lawsuits, or other legal proceedings; events that damage the company's reputation or brand; the agricultural business cycle, which can be unpredictable and is affected by factors such as world grain stocks, available farm acres, acreage planted, soil conditions, harvest yields, prices for commodities and livestock, input costs, and availability of transport for crops; and housing starts and supply, real estate and housing prices, levels of public and non-residential construction, and infrastructure investment. Further information concerning the company and its businesses, including factors that could materially affect the financial results, is included in the company's filings with the SEC (including, but not limited to, the factors discussed in Item 1A. "Risk Factors" of the company's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q). There also may be other factors that the company cannot anticipate or that are not described herein because the company does not currently perceive them to be material.   DEERE & COMPANY SECOND QUARTER 2024 PRESS RELEASE (In millions of dollars) Unaudited Three Months Ended Six Months Ended April 28 April 30 % April 28 April 30 % 2024 2023 Change 2024 2023 Change Net sales and revenues: Production & precision ag net sales $ 6,581 $ 7,822 -16 $ 11,430 $ 13,021 -12 Small ag & turf net sales 3,185 4,145 -23 5,610 7,146 -21 Construction & forestry net sales 3,844 4,112 -7 7,057 7,314 -4 Financial services revenues 1,395 1,107 +26 2,770 2,147 +29 Other revenues 230 201 +14 553 410 +35 Total net sales and revenues $ 15,235 $ 17,387 -12 $ 27,420 $ 30,038 -9 Operating profit: * Production & precision ag $ 1,650 $ 2,170 -24 $ 2,695 $ 3,378 -20 Small ag & turf 571 849 -33 897 1,296 -31 Construction & forestry 668 838 -20 1,234 1,463 -16 Financial services 209 41 +410 466 279 +67 Total operating profit 3,098 3,898 -21 5,292 6,416 -18 Reconciling items ** 23 (47) 49 (69) Income taxes (751) (991) -24 (1,220) (1,528) -20 Net income attributable to Deere & Company $ 2,370 $ 2,860 -17 $ 4,121 $ 4,819 -14 * Operating profit is income from continuing operations before corporate expenses, certain external interest expenses, certain foreign exchange gains and losses, and income taxes. Operating profit for financial services includes the effect of interest expense and foreign exchange gains or losses. ** Reconciling items are primarily corporate expenses, certain interest income and expenses, certain foreign exchange gains and losses, pension and postretirement benefit costs excluding the service cost component, equity in income of unconsolidated affiliates, and net income attributable to noncontrolling interests.   DEERE & COMPANY STATEMENTS OF CONSOLIDATED INCOME For the Three and Six Months Ended April 28, 2024 and April 30, 2023 (In millions of dollars and shares except per share amounts) Unaudited Three Months Ended Six Months Ended 2024 2023 2024 2023 Net Sales and Revenues Net sales $ 13,610 $ 16,079 $ 24,097 $ 27,481 Finance and interest income 1,387 1,079 2,746 2,073 Other income 238 229 577 484 Total 15,235 17,387 27,420 30,038 Costs and Expenses Cost of sales 9,157 10,730 16,357 18,663 Research and development expenses 565 547 1,098 1,043 Selling, administrative and general expenses 1,265 1,330 2,330 2,283 Interest expense 836 569 1,638 1,049 Other operating expenses 295 363 664 660 Total 12,118 13,539 22,087 23,698 Income of Consolidated Group before Income Taxes 3,117 3,848 5,333 6,340 Provision for income taxes 751 991 1,220 1,528 Income of Consolidated Group 2,366 2,857 4,113 4,812 Equity in income of unconsolidated affiliates 2 2 3 3 Net Income 2,368 2,859 4,116 4,815 Less: Net loss attributable to noncontrolling interests (2) (1) (5) (4) Net Income Attributable to Deere & Company $ 2,370 $ 2,860 $ 4,121 $ 4,819 Per Share Data Basic $ 8.56 $ 9.69 $ 14.80 $ 16.26 Diluted 8.53 9.65 14.74 16.18 Dividends declared 1.47 1.25 2.94 2.45 Dividends paid 1.47 1.20 2.82 2.33 Average Shares Outstanding Basic 276.8 295.1 278.4 296.3 Diluted 277.9 296.5 279.5 297.8 See Condensed Notes to Interim Consolidated Financial Statements.   DEERE & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (In millions of dollars) Unaudited April 28 October 29 April 30 2024 2023 2023 Assets Cash and cash equivalents $ 5,553 $ 7,458 $ 5,267 Marketable securities 1,094 946 856 Trade accounts and notes receivable – net 8,880 7,739 9,971 Financing receivables – net 45,278 43,673 38,954 Financing receivables securitized – net 7,262 7,335 5,659 Other receivables 2,535 2,623 2,593 Equipment on operating leases – net 6,965 6,917 6,524 Inventories 8,443 8,160 9,713 Property and equipment – net 7,034 6,879 6,288 Goodwill 3,936 3,900 3,963 Other intangible assets – net 1,064 1,133 1,222 Retirement benefits 3,056 3,007 3,519 Deferred income taxes 1,936 1,814 1,308 Other assets 2,592 2,503 2,510 Total Assets $ 105,628 $ 104,087 $ 98,347 Liabilities and Stockholders' Equity Liabilities Short-term borrowings $ 17,699 $ 17,939 $ 17,109 Short-term securitization borrowings 6,976 6,995 5,379 Accounts payable and accrued expenses 14,609 16,130 14,716 Deferred income taxes 491 520 511 Long-term borrowings 40,962 38,477 35,611 Retirement benefits and other liabilities 2,105 2,140 2,520 Total liabilities 82,842 82,201 75,846 Redeemable noncontrolling interest 98 97 102 Stockholders' Equity Total Deere & Company stockholders' equity 22,684 21,785 22,395 Noncontrolling interests 4 4 4 Total stockholders' equity 22,688 21,789 22,399 Total Liabilities and Stockholders' Equity $ 105,628 $ 104,087 $ 98,347 See Condensed Notes to Interim Consolidated Financial Statements.   DEERE & COMPANY STATEMENTS OF CONSOLIDATED CASH FLOWS For the Six Months Ended April 28, 2024 and April 30, 2023 (In millions of dollars) Unaudited 2024 2023 Cash Flows from Operating Activities Net income $ 4,116 $ 4,815 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Provision (credit) for credit losses 131 (89) Provision for depreciation and amortization 1,045 995 Other non-cash adjustments (Note 1) 173 Share-based compensation expense 104 54 Credit for deferred income taxes (120) (377) Changes in assets and liabilities: Receivables related to sales (2,469) (4,407) Inventories (409) (982) Accounts payable and accrued expenses (1,300) (313) Accrued income taxes payable/receivable (29) (96) Retirement benefits (208) (68) Other 83 148 Net cash provided by (used for) operating activities 944 (147)