Deere Surpasses Q3 Profit Expectations Despite Sluggish Demand

Deere & Company reported a net income of $1.734 billion, or $6.29 per share, for the third quarter of 2024, a significant drop from $2.978 billion for the same period in 2023. Despite the decline, the company has maintained its full-year net income forecast for fiscal 2024 at approximately $7 billion. The reduction in profit is attributed to high borrowing rates and decreased farm incomes, which have lowered the demand for agricultural machinery.

Worldwide net sales and revenues fell by 17% to $13.152 billion in Q3, and decreased by 11% to $40.572 billion for the first nine months of the year. Financial services net income also saw a decline due to higher provisions for credit losses and less favorable financing spreads, although this was partially offset by income from higher average portfolio balances and favorable discrete tax items. Deere's financial services operations are expected to perform better than in fiscal year 2023 due to higher income earned from increased interest in average portfolio balances.

Despite the challenging market conditions, Deere's shares rose by about 5% following the earnings report, which exceeded analyst expectations of $5.70 per share. The company has implemented cost control measures and maintained price increases from the past two years to protect its margins. These actions have helped Deere navigate through decreased demand and economic pressures in the agricultural sector.