Amid layoffs, Deere beats profit targets as strong pricing, cost cuts counter slow demand

[cigaretteman]

After massive layoffs across its Iowa manufacturing operations, Deere & Co beat analysts' expectations for third-quarter profit on Thursday, as stronger pricing and cost control measures protected its margins from sluggish demand for its farm equipment.

U.S. machinery makers have succeeded in maintaining the price increases they implemented two years ago, a move that was prompted by supply chain complications and a surge in demand for industrial and agricultural equipment.

The higher prices have helped farm equipment makers to shield their profits from a slowdown in demand for new machines amid a decline in crop prices and high borrowing costs, which also have forced dealers to limit inventory restocking.

In reaction to the downturn, Deere Beginning in March has laid off nearly 2,300 workers across its Iowa plants in Ankeny, Dubuque, Ottumwa, Urbandale, Waterloo and the Quad Cities’ Davenport and East Moline, as well as at an Urbandale research center, its Moline, Illinois, world headquarters, and other white collar offices in Johnston and Dubuque.

Deere maintained its 2024 net income at about $7 billion, even as U.S. farm incomes are forecast to plunge in 2024 due to a sharp decline in commodity crop prices, heightened production costs and shrinking government support.

Shares of the world's largest farm equipment maker rose 2.2% in early trading.

Pricing helps Deere maintain earnings despite weakened sales​

For the third-quarter, Deere reported a net income of $6.29 per share, compared with LSEG estimate of $5.63, while net sales and revenue decreased 17% to $13.15 billion.


"Deere's pricing power was reflected well in Q3 as price helped to dampen impacts from contracting volumes," CFRA Research analyst Jonathan Sakraida said.

Though sales in one of its agriculture segments, which includes larger farm equipment, fell 25% to $5.1 billion, due to lower shipment volumes, the impact was partially offset by better pricing.

Amid layoffs, Deere beats profit targets as strong pricing, cost cuts counter slow demand

Though agriculture is in a downturn and Deere has laid off thousands of workers in Iowa, it posted strong profits for the third quarter

www.desmoinesregister.com

 

[soybean]

I think its important to keep in mind during these cyclical downturns that companies like Deere are owned by the shareholders, not the employees. As painful as these layoffs are to the families that rely on jobs at the companies, they are usually required to keep the company healthy.

I have a tremendous amount of sympathey for the worker effected, and I support the unions that many of these workers belong to, but we must always keep in mind that these companies only exist to make a profit.

I have long thought that the workers compensation should include fractional share ownership that over the years would develop a true sense of ownership for the workers.

The economy we all labor under in our careers can be very rewarding, but also very painful and discouraging. I pray that these layoffs at Deere stop at 2,300, but I fear they will not. Keep in mind that Deere's agricultural customers are for the most part growing a crop that finds the market price below the cost of production. This will all pass of course, but not before many worries and much belt tightening.

 

[onlyTheObvious]

People need to buy stocks via 401k Roth’s or brokerage accounts if you want to participate in the modern economy.

You need to take care of yourself. “The Company” isn’t going to.

Deere employees have it pretty good, nice benefits and nice bonuses. I heard a lot of people bad mouth them after the recent layoffs. Truth is almost every other place would have done the same thing and those other places were not compensating their employees nearly as much. I have a kid employed at Deere in a salary position. They have it really good.

 

[CarolinaHawkeye]

If they have to lay off employees, there should be no bonuses or raises. And for the record, there should be layoffs when there are downturns. The company I used to work for in Minnesota, which actually supplied tractor cabs to John Deere, would work people overtime until they were certain sales were sustainable.