Deere Congress

Tractor company’s quarterly report shows strain on agricultural sector

Editor’s note: This article was published prior to the Trump administration’s Thursday announcement of a $16 billion aid package bill for farmers. Call it premonition!

John Deere, the name synonymous with tractors and therefore all things farming, released its second quarter results and ensuing financial outlook on May 17. Within that link are a lot of forced words of optimism, indicators of slumping income, and silver lining-like takeaways. However, the company was ultimately not able to contain its clear frustration with current political strains and how the Trump administration has affected its results:

“John Deere produced solid results for the quarter despite uncertain conditions in the agricultural sector,” said Samuel R. Allen, chairman and chief executive officer. “Ongoing concerns about export-market access, near-term demand for commodities such as soybeans, and a delayed planting season in much of North America are causing farmers to become much more cautious about making major purchases. At the same time, overall economic conditions remain positive, a fact that along with a growing customer base has contributed to strong results from our construction and forestry business.”

While it didn’t mention Trump by name, it was abundantly clear the earnings report at least blamed our president’s administration and policies. “Affecting last year’s results were charges to the provision for income taxes due to U.S. tax reform legislation (tax reform),” it reads. “Without these adjustments, net income attributable to Deere & Company for the second quarter and first six months of 2018 would have been $1.034 billion, or $3.14 per share, and $1.476 billion, or $4.49 per share, respectively. (Information on non-GAAP financial measures is included in the appendix.)”

That’s a straight-up “we would’ve earned this if it weren’t for your interference” claim, and it’s pretty resounding when coming from one of the most recognizable brands in the country.

By the numbers, Deere & Company reported net income of $1.135 billion for the second quarter ended April 28, 2019, or $3.52 per share, compared with net income of $1.208 billion, or $3.67 per share, for the quarter ended April 29, 2018. For the first six months of the year, net income attributable to Deere & Company was $1.633 billion, or $5.07 per share, compared with $673.2 million, or $2.05 per share, for the same period last year.

The company also mentioned the perceived exit of Britain from the European Union as a contributing factor, and cautioned against investors anticipating more fallout from “Brexit”. Lastly, in another telling critique of current American policy, the report mentioned a detailed paragraph about trade and tariffs as negatively affecting its outlook for the coming year-plus:

“Additional factors that could materially affect the company’s operations, access to capital, expenses and results include changes in, uncertainty surrounding and the impact of governmental trade, banking, monetary and fiscal policies, including financial regulatory reform and its effects on the consumer finance industry, derivatives, funding costs and other areas, and governmental programs, policies, tariffs and sanctions in particular jurisdictions or for the benefit of certain industries or sectors; retaliatory actions to such changes in trade, banking, monetary and fiscal policies; actions by central banks; actions by financial and securities regulators; actions by environmental, health and safety regulatory agencies, including those related to engine emissions, carbon and other greenhouse gas emissions, noise and the effects of climate change; changes to GPS radio frequency bands or their permitted uses; changes in labor and immigration regulations; changes to accounting standards; changes in tax rates, estimates, laws and regulations and company actions related thereto; changes to and compliance with privacy regulations; compliance with U.S. and foreign laws when expanding to new markets and otherwise; and actions by other regulatory bodies.”

Deere Lord. Given the agricultural community’s current stance on American politicians, this can’t be an indicator of anything good.


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