Deere hurt by housing

Sales at John Deere's construction & forestry division were down -13% for the financial year ending October 31. The businesses' revenues were down to US$ 5.04 billion, compared to US$ 5.78 billion in 2006. Overall though, the company saw revenues climb +9% to US$ 24.1 billion, thanks to growth in its agricultural, commercial and consumer equipment businesses.

There was a similar picture as far as profits were concerned. The construction & forestry division saw its operating profits slip -29% in 2007 to US$ 571 million, for an 11.3% margin. A year ago profits for this business line stood at US$ 802 million – a 13.9% profit margin. Again, overall profits for the company were up, with a +18% rise on last year to US$ 2.87 billion.

Commenting on the results, a company statement said, “US markets for construction and forestry equipment are forecast to remain under pressure in 2008 due in a large part to a continuing slump in housing starts. Non-residential construction is expected to remain flat at last year's relatively strong levels.”

John Deere is generally recognised as no. 2 in the US construction equipment market, behind Caterpillar. However, the company only sells its construction equipment in North and South America. According to iC's Yellow Table ranking of construction equipment manufacturers, it claims fourth position globally, behind Cat, Komatsu and Terex.