Deere & Company has reported a 5% increase in its first-quarter sales compared with the same period last year. Equipment sales were $8.531 billion for the quarter, compared with $8.051 billion in 2021.
“Deere’s performance in the first quarter was impressive given production issues surrounding the delayed ratification of our UAW contract in late November as well as persistent challenges posed by the supply chain and pandemic,” said John C. May, chairman and chief executive officer. “These factors led to higher production costs in the quarter. We continue to work closely with key suppliers to manage the situation, enabling our customers to deliver food production and critical infrastructure. We are proud of the extraordinary efforts being taken by our dealers and employees to get products to our customers as soon possible in today’s challenging environment.”
The company says construction and forestry sales increased due to price realization and higher shipment volumes. Net sales for the segment for the quarter were $2.54 billion, up 3% from $2.47 billion reported in the same period last year.
“Looking ahead, we expect demand for farm and construction equipment to continue benefiting from strong fundamentals,” May added. “At the same time, we are excited about the opportunities to create value for our customers and other stakeholders as outlined in our goals. Because of the hard work that has been done executing the Smart Industrial operating model, we are leveraging technology that delivers improved customer profitability, productivity and sustainability.”
The current period was also impacted by the UAW contract-ratification bonus, resulting in costs of $90 million. Additionally, the UAW work stoppage contributed to inefficiencies in certain factories and higher production costs.
Deere Financial Services saw a 13% increase in net income for the quarter due to income earned on higher average portfolio balances and improvement on operating-lease residual values.
For the U.S. and Canada, the company anticipates a 5% to 10% increase in sales of heavy construction equipment and flat to 5% increase in sales of compact equipment.