Deere & Company says net sales and revenues decreased 4 percent in its first quarter (ending Feb. 2) compared with the same period the year before. One culprit for the decrease: slowing activity in the company’s Construction & Forestry division.
Net sales for the Construction & Forestry division decreased by 10 percent, with the 1Q 2020 posting $2.044 billion compared to 1Q 2019 results of $2.260 billion.
Deere has also reduced factory production and lowered inventories “in response to current market conditions,” the company says. In a series of announcements, Deere said it was laying off more than 300 employees at its Davenport and Dubuque, Iowa, plants, along with its John Deere Harvester Works facility in East Moline, Illinois.
Deere says “Construction & Forestry sales declined for the quarter due to lower shipment volumes and the unfavorable effects of currency translation, partially offset by price realization. Operating profit moved lower as a result of lower shipment volumes / sales mix and voluntary employee-separation expenses. These items were partially offset by price realization.”
The company expects its worldwide Construction & Forestry sales to be down 10 to 15 percent in 2020, with North American sales down 5 to 10 percent for the year.
“The outlook reflects slowing construction activity as well as efforts to bring down field inventory levels,” Deere says.
“Looking ahead, we are particularly encouraged by the broad use of precision technologies and believe the company is well-positioned to strengthen its leadership in this vital area,” says John C. May, CEO. “In addition, we are proceeding with a series of measures to create a more focused organizational structure that can operate with greater speed and agility. These steps are leading to improved efficiencies and helping the company focus its resources and investments on areas that have the most impact on performance.”