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Deere Smashes Earnings Forecast, Repeats Caterpillar Supply Chain Concern

“While the company is clearly performing at a high level, Deere expects to see increased supply-chain pressures through the balance of the year,” said CEO John May.

Deere & Co.  (DE) - Get Deere & Company Report posted stronger-than-expected second quarter earnings Friday, and boosted its full-year profit forecast, thanks to a surge in demand for farming and construction equipment.  

Deere said earnings for the three months ending in April, the group's fiscal second quarter, came in at $5.68 per share, up more than double from the same period last year and firmly ahead of the Street consensus forecast of $4.52 per share. Group worldwide sales, Deere said, rose 30% from last year to $12.058 billion, against topping analysts' estimates of a $10.44 billion tally.

Looking into the end of the 2021 fiscal year, Deer said it sees overall net income of between $5.3 billion and $5.7 billion, up from its last forecast of between $4.6 billion to $5 billion. That implies earnings in the range of $14.65 to $15.95 per share.

“With another quarter of solid performance, John Deere closed out the first half of the year on a highly encouraging note,” said CEO John May. “Our results received support across our entire business lineup, reflecting healthy worldwide markets for farm and construction equipment."

“While the company is clearly performing at a high level, Deere expects to see increased supply-chain pressures through the balance of the year,” May added. “We are working closely with key suppliers to secure the parts and components that our customers need to deliver essential food production and infrastructure."

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"Despite these challenges, Deere is on track for a strong year and we believe is well-positioned to unlock greater value for our customers and other stakeholders in the future.”  

Deere shares were marked 2.5% higher in early trading immediately following the earnings release to change hands at $364.00 each.

Late last month, Deere's larger rival, Caterpillar Inc  (CAT) - Get Caterpillar Inc. Report, posted posted much stronger-than-expected first quarter earnings of $2.87 per share, on revenues of $11.9 billion, thanks to a surge in construction sales in Asia and Latin America. 

Caterpillar CFO Andrew Bonfield told investors on a conference call that while the group remains "positive" in terms of the impact of rising input costs and supply-chain risks, "we’re diligently monitoring the risks and their potential impact going forward."

"It’s a fluid situation in terms of potential supply challenges, raw material cost pressures and pandemic-related concerns, areas where we have varying levels of control," Bonfield said. "Our aim is to minimize the impact of these factors and maximize factory uptime so we can satisfy improving customer demand."