AGRICULTURAL equipment giant, John Deere has recorded a big fall in worldwide equipment sales and revenue in the past financial year.
Net sales in Deere’s equipment operations business was down US$7.186 billion to US$25.775 billion for the financial year ending October compared to US$32.961 billion for the same period 2014.
Net sales for the fourth financial quarter were US$5.932 billion compared with US$8.043 billion in 2014.
And the bad news is set to continue with the company predicting overall equipment sales revenue, including from its forestry and construction equipment business, will be down about seven per cent in 2016 to $24 billion.
The plunge has been widespread this year with sales outside North America down 31pc for the quarter and 28pc for the year.
The news comes on the back of consecutive tough years in the ag equipment market and Deere expects further pain ahead with sales for agricultural equipment in the US and Canada forecast to be down about 15 to 20pc for 2016.
Deere says the decline reflects the impact of low commodity prices and stagnant farm incomes, and expects higher-horsepower tractor sales to take the biggest hit.
The American Association of Equipment Manufacturers reported sales in the US 2WD 100-horsepower and above market category dropped 29.5pc for October compared to the same month in 2014, marking an overall reduction of 23pc year-to-date.
Four-wheel drive tractors were likewise down 22.9pc for October, bringing the year-to-date decline to 42pc.
Harvesters also continued a dramatic fall, down 35pc year to date, dropping almost 20pc in October compared to the same month in 2014.
Deere is forecasting full-year 2016 sales in the European Union to be flat or down five per cent, with the decline attributable to low commodity prices and farm incomes, including further pressure on the dairy sector.
In South America, sales of tractors and combines are expected to be off 10 to 15pct on the back of economic concerns in Brazil and uncertainty about government investment. China’s weakening economy sees Asian sales projected to be flat to down slightly.
However, the company is optimistic moves to trim costs and realise higher equipment prices will pay dividends in coming years.
Deere chairman and CEO, Samuel R. Allen said, "sales and earnings for the year were the sixth-highest in company history, a notable achievement in light of the challenging market conditions we experienced. The company's performance benefited from the adept execution of our business plans and disciplined cost management."
“As a result, Deere remains well-positioned to serve its customers while continuing to make investments in quality and innovation that are designed to drive growth in the future," he said.