Earnings of a major equipment company shot up in the second quarter on strong sales, even as supply chain issues hamper further growth.
On Friday, Deere & Co. reported its second quarter earnings rose 17% despite factors such as the war in Ukraine and continued supply-chain issues. Net income for the quarter was $2.098 billion, or $6.81 per share, up from $1.790 billion and $5.68 during the same period last year.
“Deere’s second-quarter performance reflected a continuation of strong demand even as we face supply-chain pressures affecting production levels and delivery schedules,” said John C. May, Deere’s chairman and chief executive officer, in a press release from the company. “Deere employees, suppliers, and dealers are working hard to address these challenges. We are proud of their extraordinary efforts to get products to our customers as soon as possible under the challenging circumstances.”
Although the company’s earnings rose, Deere experienced a decrease in net income for financial services. That category posted a 6% decrease, from $222 million in 2021 to $208 million in 2022. The company said the decline was due to higher reserves for credit losses, primarily a result of the war in Ukraine.
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Since the events in Ukraine, Deere has suspended shipments to Russia. As of May 1, 2022, the company reported its net exposure in Russia/Ukraine was approximately $454 million.
Production and Precision net sales jumped 13% to $5.1 billion. Small Agriculture and Turf net sales saw a 5% increase to $3.57 billion. Construction and Forestry also saw a positive change in net sales and rose 9% in the last year.
“Looking ahead, we believe demand for farm equipment will continue benefiting from positive fundamentals in spite of availability concerns and inflationary pressures affecting our customers’ input costs,” May said.
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