Deere & Co, the maker of John Deere machinery, has signalled it intends to increase prices on its machinery to offset rising costs for freight and raw materials. US freight costs have soared by 30% in the last year due to a shortage of drivers and rising oil prices.
At the same time, steel and aluminium prices have risen in recent months after US President Donald trump placed tariffs on imports of both metals. To offset these rising costs, John Deere has said it will increase prices on its machinery range, including combines and tractors.
The Illinois-based company made the announcement as it unveiled a 34% increase in second quarter sales to $10.7bn (€9.1bn) and a 17% rise in operating profits to $1.5bn (€1.3bn). However, Deere’s profit margins for the quarter were squeezed from 15.4% last year to less than 14% in 2018 as a result of the higher freight and steel costs.
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The company said sales of agricultural machinery such as tractors and combines increased 22% in the quarter to just over $7bn (€6bn) as a result of strong demand in North and South America. Operating profit from the sale of agricultural machinery increased 5% to $1bn (€900m) as profit margins narrowed from 17.5% last year to 15% this year.
John Deere chief executive Samuel Allen said the company is being helped by the broad improvement in the global economy, as well as higher grain prices in North and South America.
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Deere & Co, the maker of John Deere machinery, has signalled it intends to increase prices on its machinery to offset rising costs for freight and raw materials. US freight costs have soared by 30% in the last year due to a shortage of drivers and rising oil prices.
At the same time, steel and aluminium prices have risen in recent months after US President Donald trump placed tariffs on imports of both metals. To offset these rising costs, John Deere has said it will increase prices on its machinery range, including combines and tractors.
The Illinois-based company made the announcement as it unveiled a 34% increase in second quarter sales to $10.7bn (€9.1bn) and a 17% rise in operating profits to $1.5bn (€1.3bn). However, Deere’s profit margins for the quarter were squeezed from 15.4% last year to less than 14% in 2018 as a result of the higher freight and steel costs.
The company said sales of agricultural machinery such as tractors and combines increased 22% in the quarter to just over $7bn (€6bn) as a result of strong demand in North and South America. Operating profit from the sale of agricultural machinery increased 5% to $1bn (€900m) as profit margins narrowed from 17.5% last year to 15% this year.
John Deere chief executive Samuel Allen said the company is being helped by the broad improvement in the global economy, as well as higher grain prices in North and South America.
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