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Economic uncertainty hurts Deere construction business

(Courtesy Iowa Radio News) – Quad Cities-based Deere and Company set another earnings record in the second quarter, and it’s also an all-time high for any quarter. Deere says net income totaled nearly $1.1-billion for February, March, and April, or $2.76 per share, compared to $2.61 one year ago.

Deere spokesman, Ken Golden, says agriculture and turf equipment sales rose 12 percent in the second quarter. But sales of construction and forestry equipment dropped five percent.

“Right now I think the construction equipment market is impacted by the lack of clarity in fiscal policy. Some of the economic factors that we think if they were clarified, people would have more confidence in building, as well the year has started off somewhat wet for construction in North America. For John Deere, North America is the largest part of our construction markets,” Golden says.

But he’s optimistic that demand for backhoes, bulldozers, and excavators will eventually recover. Golden says Deere is now earning the same amount in a single quarter that it earned in an entire year in 1998.

“And then we have expansion of product lines in other parts or the world — like for instance construction is now moving into China, and Brazil and Russia,” Golden says. “And so all of these things put together create a company that is much more global and is able to benefit when markets are strong in one place and not so strong in other places.”

Overall, second quarter sales increased nine percent, to $10.9-billion dollars. And that’s another quarterly record for the company. When its fiscal year ends next fall, Deere now predicts it will set another annual earnings record at $3.3-billion.