Deere & Company (DE +1.01%) announced earnings today, reporting fiscal second-quarter net income of $2.11 per share, beating analysts expectations of $1.72 per share. The big earnings beat came with new guidance, however. The company expects a 45% decline in net income for the full year compared to last year.
Deere chairman and CEO John May, said the company's focus has been to operate safely and protect the health and well-being of its employees through the COVID pandemic, while also satisfying customer requirements. While the company continued to operate to fulfill customer needs as an essential business, its factory in Moline, Illinois also began producing a planned 225,000 face shields to be distributed to healthcare workers in communities where Deere operates.
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While second-quarter sales also came in ahead of estimates, they were 18% below year ago levels. Hardest hit was Deere's construction and forestry segment, where year-over-year sales decreased 25% and operating profit declined 72%.
The company sees sales of its agricultural division down 10% to 15% for fiscal 2020, while sales for construction are forecast to decline 30% to 40%. The other area with significant negative impacts is the finance group. John Deere Capital Corporation (JDCC) saw net income drop 69% in this recent quarter. The capital arm has been hit by "a higher provision for credit losses, unfavorable financing spreads, and increased losses and impairments on lease residual values," the company said.
