In the fiscal third quarter, Deere’s (DE) Construction & Forestry segment reported revenue of US$3 billion, a 100% rise compared with fiscal Q3 2017 when it reported revenue of US$1.5 billion. The quarter saw the segment’s highest second-quarter revenue. Source: The Market Realist
The segment’s revenue growth was mainly driven by the company’s acquisition of Wirtgen Group, which was completed in December. Wirtgen contributed 77% to the segment’s growth. Higher shipping volumes also drove the segment’s revenue. However, the segment didn’t have any foreign currency influence during the quarter.
The segment reported an operating profit of US$281 million in the fiscal third quarter, a rise of 153.1% from the corresponding quarter of the previous year when it reported an operating profit of US$111 million.
Wirtgen Group’s contribution, higher shipments, and lower warranty expenses helped the segment’s operating profit grow. However, higher raw material costs and sales expense had an adverse impact on its operating profit. As a result, the segment reported an operating margin of 9.4% compared with 7.4% in the previous year, a gain of 200 basis points year- over-year.
Wirtgen Group will continue to have a positive impact on the Construction & Forestry segment with a ~ 55% contribution.
