Analyst Note| Brian Bernard, CFA, CPA |
The coronavirus pandemic was undoubtedly a headwind for Deere in fiscal 2020, but the company managed to post resilient operating margins in the fourth quarter, largely due to cost-cutting and solid pricing. Operating margins for equipment operations came in at about 12%, 310 basis points higher than in the fourth quarter of 2019. The agriculture segment’s operating margins increased to 13.9% from 9.2% in the same period last year. Deere’s equipment sales declined 1% year over year to $8.66 billion due to weaker volumes in the construction segment (net sales down 16% year over year). Agriculture revenue increased 8% year over year, primarily due to strong pricing.