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Deere’s Fourth-Quarter Results Showed Resilience, Setting Up a Return to Growth in Fiscal 2021

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.

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Company Profile

Business Description

Deere is the world’s leading manufacturer of agricultural equipment with approximately $35 billion in annual revenue, including $3.4 billion from its financial services arm. The company is divided into two reportable segments: (1) agriculture and turf and (2) construction and forestry. Approximately 60% of Deere equipment is sold in North America and Canada. The principal products harvested by Deere equipment include grain, oilseeds, cotton, sugar, and biomass. In 2020, agriculture and turf made up approximately 71% of total revenue while construction and forestry generated 29%.

One John Deere Place
Moline, IL, 61265
T +1 309 765-8000
Sector Industrials
Industry Farm & Heavy Construction Machinery
Most Recent Earnings Oct 31, 2020
Fiscal Year End Nov 1, 2021
Stock Type Cyclical
Employees 69,600