Deere’s Construction and Forestry segment reported revenue of US$1.10 billion in fiscal 1Q17, a decline of 6% compared with US$1.17 billion in fiscal 1Q16. Source: Market Realist
The segment’s revenue fell mainly due to lower shipment volumes.
The Construction and Forestry segment reported an operating profit of US$34 million in fiscal 1Q17, a decrease of 51% year-over-year, compared with US$74 million in fiscal 1Q16.
The decline in the segment’s operating income was mainly due to higher sales incentives, which clearly reflected in Deere’s selling, general, and administrative expenses.
Further, expenses related to a voluntary employee separation program adversely affected the segment’s operating profit.
As a result, the segment’s operating profit margin fell from 6% in fiscal 1Q16 to 3.1% in fiscal 1Q17.
Deere expects the Construction and Forestry segment to grow 7% in fiscal 2017. The expected growth follows expected moderate economic growth worldwide.
Deere expects the US GDP to grow 2.2% in fiscal 2017 versus the previous estimates of 2%.
Further, housing starts in the United States are expected to be higher than in previous estimates.
However, in forestry, global sales are expected to be flat to down 5%.
