Deere & Company (DE) has reported a 61.97 percent jump in profit for the quarter ended Apr. 30, 2017. The company has earned $802.40 million, or $2.49 a share in the quarter, compared with $495.40 million, or $1.56 a share for the same period last year. Revenue during the quarter grew 5.23 percent to $8,287 million from $7,875.40 million in the previous year period. Gross margin for the quarter expanded 453 basis points over the previous year period to 34.30 percent. Total expenses were 83.15 percent of quarterly revenues, down from 88.26 percent for the same period last year. This has led to an improvement of 511 basis points in operating margin to 16.85 percent.
Operating income for the quarter was $1,396.20 million, compared with $924.30 million in the previous year period.
"John Deere reported strong results in the second quarter as market conditions showed signs of further stabilization," said Samuel R. Allen, chairman and chief executive officer. “We are seeing modestly higher overall demand for our products, with farm machinery sales in South America experiencing a strong recovery. Deere’s performance also reflects the sound execution of our operating plans, the strength of a broad product portfolio, and the impact of our actions to develop a more agile cost structure. As a result, we have raised our forecast and are now calling for significantly higher earnings for the full year."
For fiscal year 2017, Deere & Company forecasts revenue to grow at 9 percent. The company projects net income to be $2,000 million. For the third-quarter 2017, Deere & Company forecasts revenue to grow at 18 percent.
Operating cash flow remains negative
Deere & Company has spent $175 million cash to meet operating activities during the first half as against cash outgo of $312.40 million in the last year period. Cash flow from investing activities was $300.50 million for the first half, up 43.10 percent or $90.50 million, when compared with the last year period. It has incurred net capital expenditure of $391.70 million on net basis during the first six months, down 51.44 percent or $414.90 million from year ago period.
Cash flow from financing activities was $72 million for the first six months, up 244.50 percent or $51.10 million, when compared with the last year period.
Cash and cash equivalents stood at $4,525.80 million as on Apr. 30, 2017, up 9.50 percent or $392.60 million from $4,133.20 million on May 01, 2016.
Debt comes down
Deere & Company has recorded a decline in total debt over the last one year. It stood at $35,441.30 million as on Apr. 30, 2017, down 6.24 percent or $2,357.40 million from $37,798.70 million on May 01, 2016. Total debt was 783.09 percent of total assets as on Apr. 30, 2017, compared with 63.87 percent on May 01, 2016. Interest coverage ratio improved to 6.15 for the quarter from 4.84 for the same period last year.
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