Deere & Co. this morning reported a 41% drop in net income in its second quarter amid the COVID-19 pandemic.
The company recorded net income of $666 million for the quarter that ended May 3, compared to $1.135 billion during the same period last year.
A press release states that worldwide net sales and revenues fell 18% to $9.25 billion. Net sales and revenue were down a total of 13% through the first six months of the company's fiscal year.
In the construction and forestry division, which includes John Deere Dubuque Works, net sales fell 25% in the second quarter to $2.26 billion, while operating profit tumbled 72% to $96 million.
Deere predicts that net income for the entire year for the company will be about $1.6 billion to $2 billion, while cautioning that "many uncertainties remain" regarding the impacts of the COVID-19 crisis.
The company predicts that worldwide sales of construction and foresty equipment will be down 30% to 40% for the whole year.
“Construction equipment industry sales in the U.S. and Canada are now forecast to be down 20 to 30%, reflecting sharp declines in oil and gas activity, rental capital expenditures, as well as overall moderation in general economic activity during the second quarter,” said Manager of Investor Communications Brent Norwood.
Moreover, sales of forestry equipment are predicted to be down as much as 20% for the fiscal year.
Norwood acknowledged that plants will not be as busy as usual.
“The order book remains within our historical 30-to-60-day replenishment window, but at a much-reduced production schedule,” he said.
Company CEO and Chairman John May spoke about efforts to keep plants running amid the COVID-19 pandemic.
“Our first priority has been and will always be the health, safety and overall welfare of our employees,” he said. “Only by protecting our workforce can we deliver on our commitments to customers and fulfill our role as an essential business.”
He emphasized that plants have conducted health screening, outfitted workers with personal protective equipment, adopted social-distancing guidelines, enhanced cleaning procedures and staggered production schedules. Such increased safety measures have allowed Deere to keep the majority of its operations running.
“All of our global manufacturing base is running, with the exception of a few facilities operating at limited capacity, such as those in India,” he said.