MOLINE, Ill., Feb. 15, 2019 /PRNewswire/ — Deere & Co. reported net income of $498.5 million for the first quarter ended Jan. 27, 2019 compared with a net loss of $535.1 million for the quarter ended Jan. 28, 2018. Affecting first quarter 2018 results were charges to the provision for income taxes due to U.S. tax reform legislation.  Without these tax reform charges, first-quarter 2018 net income results would have been $442.1 million.

Net sales were up 16% to $6.94 billion. Forecast for 2019 calls for net income of approximately $3.6 billion on sales gain of about 7%. Construction & Forestry results moved strong higher.

“Although Deere has continued to make solid progress on a number of fronts and reported higher earnings for the quarter, our results were hurt by higher costs for raw materials and logistics as well by customer concerns over tariffs and trade policies,” said Samuel R. Allen, chairman and chief executive officer. “These latter issues have weighed on market sentiment and caused farmers to become more cautious about making major purchases. At the same time, sales of John Deere construction and forestry machinery have continued at a strong pace. We believe cost pressures should abate as the year progresses and are hopeful we will soon have more clarity around trade issues. As a result, we remain cautiously optimistic about our prospects for the year ahead.”

Deere & Co. ($ in millions)

  1Q 2019 1Q 2018 % Change
Net sales & revenues $7,984 $6,913 15%
Net income (loss) $498 $(535) —
 
2019 Outlook

Company equipment sales are projected to increase by about 7% for fiscal 2019 compared with 2018. Included in the forecast are Wirtgen results for the full fiscal year of 2019 compared with 10 months of the prior year. This adds about 1% to the company's net sales forecast for the current year. Also included in the forecast is a negative foreign-currency translation effect of about 2% for the year. Net sales and revenues are projected to increase by about 7& for fiscal 2019. Net income attributable to Deere & Company is forecast to be about $3.6 billion.

Equipment Operations ($ in millions)

  1Q 2019 1Q 2018 % Change
Net sales $6,941 $5,974 16%
Operating profit $577 $419 38%
Net income (loss) $340 $(964) —

Tax Reform
     (unfavorable adjustments)

   $(1,239) —
Net income without tax reform $340 $275 —
Currency translation — net sales –3%    
 
Ag & Turf Sales

Agriculture & Turf sales for the quarter increased due to higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation and higher warranty-related expenses. Operating profit declined mainly as a result of higher production costs, higher warranty-related expenses, a less favorable product mix and higher research and development expenses, largely offset by price realization and higher shipment volumes.

Agricultural & Turf ($ in millions)

  1Q 2019 1Q2018 % Change
Net sales $4,681 $4,243 10%
Operating profit $348 $387 –10%
Operating margin 7.4% 9.1% —
 
Ag & Turf Outlook

Industry sales of agricultural equipment in the U.S. and Canada are forecast to be flat to up 5% helped by continued demand for both large and small equipment. Full year industry sales in the EU28 member nations are forecast to be flat as a result of drought conditions in key markets. South American industry sales of tractors and combines are projected to be flat to up 5% benefiting from strength in Brazil. Asian sales are forecast to be flat to down slightly. Industry sales of turf and utility equipment in the U.S. and Canada are expected to be flat to up 5% for 2019. This outlook has not changed from Deere’s previous forecast.