Machinery manufacturer John Deere has painted a very bleak picture for 2016 after it cut its outlook for the year on Friday. The maker of the famous green tractors revised its sales figures for 2016 down further after releasing its first-quarter figures for this financial year.
Deere said it expects full-year equipment sales to fall by 10% for 2016, down from its previous forecast of a 7% drop made before Christmas. The company is also forecasting net profits for 2016 of $1.3bn, which would be down almost a third compared with last year.
Sales down 13%
Deere’s first-quarter sales were back 13% year-on-year to $5.5bn, while operating profits were back 37% for the quarter to $408m. Revenues from agriculture and turf machinery sales, the backbone of Deere sales, slid by 12% over the first quarter to the end of January.
John Deere chief executive Samuel Allen said the group expects 2016 to be another “challenging” year. He added that the continuing impact of the downturn in the global farm economy as well as weakness in construction equipment markets was being reflected in the group’s results.
In 2015, Deere full-year sales fell by more than 20% after a third year in a row of poor grain prices, a strong US dollar and economic difficulties in South America all weighed on machinery sales.
Increased stake
Earlier this week, US business magnate and investor Warren Buffet upped his stake in John Deere by about 5.6m shares, giving him a 7.2% holding in the machinery giant. Berkshire Hathaway, Buffet’s investment company, is now the company’s largest institutional shareholder, with holdings worth nearly $2bn.
John Deere’s share price made a good start to the year, surging by 7% since the start of January which made it one of the top-performing stocks in the US, easily beating Apple and Facebook. However, the group’s share price plunged by more than 4% in early trading on Friday morning on the back of its downward cut in its full-year sales outlook for 2016.
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Little profit to harvest for machinery manufacturers
Machinery manufacturer John Deere has painted a very bleak picture for 2016 after it cut its outlook for the year on Friday. The maker of the famous green tractors revised its sales figures for 2016 down further after releasing its first-quarter figures for this financial year.
Deere said it expects full-year equipment sales to fall by 10% for 2016, down from its previous forecast of a 7% drop made before Christmas. The company is also forecasting net profits for 2016 of $1.3bn, which would be down almost a third compared with last year.
Sales down 13%
Deere’s first-quarter sales were back 13% year-on-year to $5.5bn, while operating profits were back 37% for the quarter to $408m. Revenues from agriculture and turf machinery sales, the backbone of Deere sales, slid by 12% over the first quarter to the end of January.
John Deere chief executive Samuel Allen said the group expects 2016 to be another “challenging” year. He added that the continuing impact of the downturn in the global farm economy as well as weakness in construction equipment markets was being reflected in the group’s results.
In 2015, Deere full-year sales fell by more than 20% after a third year in a row of poor grain prices, a strong US dollar and economic difficulties in South America all weighed on machinery sales.
Increased stake
Earlier this week, US business magnate and investor Warren Buffet upped his stake in John Deere by about 5.6m shares, giving him a 7.2% holding in the machinery giant. Berkshire Hathaway, Buffet’s investment company, is now the company’s largest institutional shareholder, with holdings worth nearly $2bn.
John Deere’s share price made a good start to the year, surging by 7% since the start of January which made it one of the top-performing stocks in the US, easily beating Apple and Facebook. However, the group’s share price plunged by more than 4% in early trading on Friday morning on the back of its downward cut in its full-year sales outlook for 2016.
Read more
Little profit to harvest for machinery manufacturers
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