Deere Q3 2024 $DE (+8.79%)

Q4 2024:

Sales: USD 11.143 billion (-28% year-on-year)

Net profit: USD 1.245 billion (-47% year-on-year)

Earnings per share (diluted): USD 4.55 (-45% year-on-year)

Operating cash flow (financial year 2024): USD 9.231 billion

Full year 2024:

Sales: USD 51.716 billion (-16% year-on-year)

Net profit: USD 7.1 billion (-30% year-on-year)

Earnings per share (diluted): USD 25.62 (-26% year-on-year)

Non-recurring factors

Legal settlements: USD 57 million profit before taxes

Depreciation and amortization: USD 28 million in the "Small Agriculture & Turf" segment

Restructuring costs: USD 157 million before tax (USD 124 million after tax)

Quarterly overview

Production & Precision Agriculture: 38% decline in sales, 64% decline in operating profit

Small Agriculture & Turf: Decline in sales of 25%, operating profit down 47

Construction & Forestry: 29% drop in sales, 36% decline in operating profit

Balance sheet overview

Assets:

Total: USD 107.32 billion (2024 vs. USD 104.09 billion in 2023)

Cash and cash equivalents: USD 7.324 billion (-1.8% year-on-year)

Inventories: USD 7.093 billion (-13% year-on-year)

Liabilities:

Total: USD 84.395 billion (+2.7% year-on-year)

Non-current liabilities: USD 43.229 billion (+12 %)

Equity:

Shareholders' equity: USD 22.843 billion (+4.8 %)

Profit and loss account

Breakdown of sales:

Production & Precision Agriculture: USD 4.305 billion (-38% year-on-year)

Small Agriculture & Turf: USD 2.306 billion (-25% year-on-year)

Construction & Forestry: USD 2.664 billion (-29% year-on-year)

Margins:

Operating Margin:

Production & Precision Agriculture: 15.3 % (previous year: 26.4 %)

Small Agriculture & Turf: 10.1% (previous year: 14.4%)

Construction & Forestry: 12.3% (previous year: 13.8%)

Cash flow

Operating cash flow (financial year 2024): USD 9.231 billion (+7% year-on-year)

Used for: USD 1.64 billion investments, USD 4.007 billion share buybacks and USD 1.605 billion dividend payments

Investment cash flow: USD -6.464 billion, characterized by acquisitions and expenses for leased equipment

Financing cash flow: USD -2.717 billion, mainly due to debt repayments and returns to shareholders

Segment analysis

Best segment: Financial Services (+13 % year-on-year sales growth), driven by higher portfolio values

Weakest area: Production & Precision Agriculture (-38% decline in sales year-on-year)

Competitive position

Deere remains a leader in precision agriculture, but faces challenges such as lower delivery volumes and difficult market conditions.

Outlook and management comments

Net profit forecast (financial year 2025): USD 5.0 to 5.5 billion

Agriculture & Turf:

Large agricultural machinery in the USA: decline of approx. 30% expected

Europe: decline in sales of 5-10% forecast

Construction & Forestry:

Global forestry: Stable to -5 %

Risks and opportunities

Risks:

Declining demand in the agricultural sector

Rising interest rates put pressure on financing

Disruptions in the supply chain and geopolitical tensions

Opportunities:

Investments in technology and precision agriculture

Partnership with Banco Bradesco in Brazil to promote growth

Five positive aspects

1. strong operating cash flow (+7 % year-on-year)

2. resilience in the Financial Services division (+13% sales growth)

3. continued investment in customer-oriented innovations

4. restructuring measures that are expected to generate annual savings of USD 220 million

5. strategic partnership in Brazil reduces risks and promotes growth

Five negative aspects

1. significant decline in sales (-28% year-on-year in Q4)

2. declining operating margins in all key segments

3. high restructuring costs (USD 157 million before taxes)

4. weakness in core markets such as the USA and Europe

5. increased write-downs and loan loss provisions