Tomorrow before the open, farm equipment giant Deere (DE) is scheduled to report results with analyst expecting EPS of $0.70 on revs of $4.86 bln. If realized, this would mean a YoY decline in EPS of 38% and a decline in revenue of 13.3% YoY.
Last quarter, on Nov 25, Deere reported Q4 earnings of $1.08 per share, $0.34 better than the Consensus of $0.74; net sales (ex-financial services, other rev) fell 26.2% year/year to $5.93 bln vs the $6.11 bln Capital IQ Consensus.
Co also provided a mixed forecast...
Co issues upside guidance for Q1, sees Q1 net sales -11% to ~$4.99 bln vs. $4.92 bln Capital IQ Consensus Estimate. Co issues in-line guidance for FY16, sees FY16 net sales -7% to ~$23.97 bln vs. $24.11 bln Capital IQ Consensus; earnings of $1.4 bln. However, Deere says, "Although our forecast calls for lower results in the year ahead, the outlook represents a level of performance that is considerably better than we have experienced in previous downturns."
Industry Peers and some color on recent earnings reports:
Some of Deere's closest competitors have already reported quarterly results, including AGCO and CNHI, which gives some nice color into the state of the global agriculture business.
On Feb 2, AGCO Corp (AGCO) reported Q4 earnings of $0.80 per share, $0.01 better than the Capital IQ Consensus of $0.79; revenues fell 21.2% year/year to $1.96 bln vs the $2.03 bln Capital IQ Consensus.
Fourth quarter regional sales results: North America (18.9)%, Europe/Africa/Middle East 0.9%, South America (33.9)%, Asia/Pacific (4.5)%. Reports inventory reduction of $134 mln compared to year-end 2014 on a constant currency basis. Co issues guidance for FY16, sees EPS of $2.30 vs. $2.39 Capital IQ Consensus Estimate; sees FY16 revs of approximately $7.0 bln vs. $6.95 bln Capital IQ Consensus Estimate.
AGCO said, "Co states: "Softer industry demand for farm equipment across all regions and the unfavorable effects of foreign currency translation are expected to negatively impact AGCO's sales and earnings for 2016... Gross and operating margins are projected to be below 2015 levels due to the impact of lower sales and production volumes, a weaker sales mix and increased investment in product development expenses. Benefits from the company's cost reduction initiatives are expected to partially offset the volume-related impacts..."
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