by Freedonia Industry Studies
August 27, 2020
Farm equipment giant Deere reported on August 21 that it expects its net income to be about $2.25 billion in 2020, up from a high-end estimate of $2 billion for the year made in May. Why? Because the sales declines in the company’s Agricultural and Turf segment this year will not be as steep as previously expected.
This will be due to both farmers replacing older equipment and a boom in landscaping-, hobby-, and home improvement-related spending among non-professionals. Sales are also holding up better than anticipated in Deere’s Construction and Forestry division. Recent price increases and “broad employee-separation programs” due to be completed by the end of the year are also expected to have a positive effect on the firm’s bottom line.
Deere’s new earnings estimate for 2020 is 31% below the $3.253 billion in net income it posted in 2019. Still, it represents a positive result in a year when industry sales of agricultural equipment in the US and Canada are expected to be down 5% to 10% and industry sales of construction equipment are expected to decline 20% in North America.
For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Global Agricultural Equipment, Global Forestry Equipment (and its companion COVID-19 Impact Report), Global Off-Road Equipment Technology 2020, and Global Power Lawn & Garden Equipment. Freedonia also offers an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.