Deere Q1 Results Beat Street View, Raises FY22 Earnings Guidance

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  • Deere & Company DE reported first-quarter FY22 sales growth of 5% year-over-year to $9.57 billion, beating the consensus of $8.19 billion.
  • The company's Equipment operations net sales were $8.531 billion for the quarter, compared with $8.051 billion in 1Q21.
  • EPS decreased to $2.92 from $3.87 in 1Q21, beating the consensus of $2.26.
  • Sales by segments: Production & Precision Agriculture $3.36 billion (+9% Y/Y), Small Agriculture & Turf $2.63 billion (+5% Y/Y), Construction & Forestry $2.54 billion (+3% Y/Y), Financial services $870 million (-2% Y/Y) and Others $168 million (-5% Y/Y).
  • The operating profit declined by 25% Y/Y to $1.24 billion, and the margin contracted by 507 bps to 12.9%.
  • Deere's net cash used for operating activities totaled $2.55 billion, compared to cash generated $143 million a year ago.
  • FY22 Outlook: Deere & Company expects net income of $6.7 billion - $7.1 billion (prior expectation $6.5 billion - $7.0 billion).
  • For Production & Precision Ag, the company expects sales to grow by 25% - 30%, Small Ag & Turf sales to expand by ~15%, and Construction & Forestry segment sales increase by 10% - 15%.
  • It expects Financial Services results to be slightly lower than FY21 due to a higher provision for credit losses lower gains on operating-lease residual values.
  • The company also announces new goals, known as the Leap Ambitions, linked to the Smart Industrial strategy and operating model introduced in 2020.
  • Price Action: DE shares are trading higher by 1.06% at $384.56 during the premarket session on Friday.
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