Deere & Co had a 43 percent drop in its first-quarter profit and the company expects lower profits the rest of the year. The weakening farm economy has decreased demand for the machinery that Deere makes, sending its first-quarter net income down to $387 million.
Nearly two-thirds of Deere’s revenue is from farm and turf machinery. The company says sales of that equipment are expected to fall 23 percent globally this year.
"Deere's first-quarter performance reflected sluggish conditions in the global farm sector, which reduced demand for agricultural machinery, particularly larger models, and led to lower sales and income," said Samuel R. Allen, chairman and chief executive officer. "At the same time, our construction and forestry and financial services divisions had higher profits, showing the benefit of a well-rounded business lineup. Deere's results also demonstrated the progress we've made creating a more flexible, responsive cost structure."
Due to large harvests, farmers have seen a drop in corn prices the last couple of years, leaving them with less money to spend on equipment.
Farm income is expected to continue falling. The USDA predicts it’ll be down 32 percent this year to $73.6 billion – the lowest since 2009.
For more information on John Deere's Financial Performance visit
http://www.deere.com/en_US/corporate/our_company/investor_relations/financial_data/earnings_releases/2015/firstqtr15.page