Lower commodity prices are expected to have a “dampening” effect on Canadian and U.S. farmers’ demand for new iron, green or otherwise, in 2014.
Deere and Co., releasing its fourth-quarter and year-end results on Wednesday, predicted industry-wide sales for farm machinery in the U.S. and Canada will slip five to 10 percent in 2014 from 2013 levels, with the decline “mainly reflecting lower sales of large equipment such as high-horsepower tractors and combines.”
“Although commodity prices and farm incomes are expected to remain at healthy levels in 2014 by historical standards, they are forecast to be lower than in 2013,” Deere said in its outlook for the year ahead.
“The company believes the decline will have a dampening effect on demand, primarily for large farm equipment.”
Industry-wide sales in the European Union are also expected to fall about five per cent in 2014 for the same reasons, Deere said. In South America, the “strong” sales seen in tractors and combines in 2013 are expected to fall about five to 10 per cent. Sales are projected up slightly into Asia, but down slightly in the former Soviet Union.
The Illinois-based multinational predicted its own worldwide sales of agriculture and turf equipment will decrease by about six per cent for full-year 2014.
Net sales for Deere’s worldwide equipment operations fell five per cent in the company’s fourth quarter but were up four per cent for the year, compared with the year-earlier periods. Equipment net sales in the U.S. and Canada dropped six per cent for the quarter but were up five per cent for the year, the company said.
In Deere’s ag and turf equipment division specifically, worldwide sales fell four per cent for the quarter, primarily due to “lower shipment volumes and the unfavourable effects of currency translation, partially offset by price realization.”
Ag and turf equipment sales increased seven per cent for the full year, however, “largely due to higher shipment volumes and price realization,” the company said.
Deere booked full-year net sales and revenues of $37.795 billion for fiscal 2013, up from $36.157 billion in 2012. Of that total, ag and turf equipment accounted for $29.132 billion, up from $27.123 billion (all figures US$).
Net income for Deere, meanwhile, for 2013 came in at $3.537 billion, up 15 per cent from $3.065 billion in 2012. Of that total, the ag and turf division’s operating profit accounted for $4.68 billion, up 19 per cent from $3.92 billion in 2012.
Q4 and full-year income were higher than in any previous fourth quarter or full year, Deere CEO Samuel Allen said in the company’s release.
The company “continued with a record number of product introductions and completed seven new factories, in Brazil, Russia, India and China,” he said. Both the new products and new capacity are “essential to helping the company expand its global customer base and realize its long-term business objectives.” — AGCanada.com Network