Deere and Co. is lowering its forecast for earnings as farmers slow down their equipment purchases amid a slump in commodity prices this year.
Deere reported Thursday that it expects net sales for of its production and precision ag division to drop 20% in fiscal 2024.
Net income for the company for FY24 is forecast at $7.5 billion to $7.75 billion, down from FY23’s $10.2 billion. In November, Deere had forecast its FY24 earnings at 7.75 billion to $8.25 billion.
Deere reported earnings of $1.75 billion for the first quarter of FY24 that ended January 28. That is down from $1.96 billion for the same quarter in FY23. Net sales for the first quarter of FY24 fell 7% year over year to $4.8 billion.
“Moving forward, we expect fleet replenishment to moderate as agricultural fundamentals normalize from record levels in 2022 and 2023,” said Deere CEO John C. May.
“Regardless of where we are in the cycle, demand is accelerating for products and solutions that empower our customers to do more with less, and we are uniquely positioned to deliver unparalleled value to our customers.”
Meanwhile, fertilizer manufacturer CF Industries reported net earnings for 2023 of $1.53 billion, down significantly from 2022’s $3.35 billion.
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The company said it believes global nitrogen demand will “remain resilient, driven by continued strong agriculture applications and recovering industrial demand. Additionally, key producing regions continue to face challenging production economics due to the cost and availability of natural gas.”
In North America, “management believes nitrogen channel inventories remain below average following a strong fall 2023 ammonia season, nitrogen imports to the region that are below the 3-year average, and reported production downtime in the region during the fourth quarter of 2023,” the company said.
CF anticipates that “North American farm profitability will improve in 2024 compared to 2023 as lower crop prices are offset by lower input costs. As a result, management expects nitrogen demand in North America for the spring 2024 application season to remain strong.”
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