Deere Delivers Solid Results in Downturn
Here's our initial take on Deere & Co.'s (NYSE: DE) fiscal 2025 second-quarter financial results.The equipment and engine manufacturer's second quarter saw more double-digit sales declines, and as is typical for many cyclical businesses, it reported an even larger earnings decline. Yet some signs indicated the worst of this cyclical downturn could be behind it. While revenue was down 16% and earnings per share fell 22%, that was a moderation from the 30% and 49% respective declines in the first quarter, which was a deterioration from the fourth quarter of the prior year, when revenue fell 28% and earnings per share were down 45%.In profitability and cash flow terms, manufacturers typically see their margins shrink during periods of weak demand, and that's been the case for Deere. The good news is that gross margins are holding up, at 40.3% from 39.9% last year. Operating margin did fall 220 basis points (2.2 percentage points) to 18.1%, a relatively solid result considering the impact of lost revenue. In all, Deere was able to bring its costs and expenses down almost $1.7 billion in the quarter.Continue reading
Here's our initial take on Deere & Co.'s (NYSE: DE) fiscal 2025 second-quarter financial results.
The equipment and engine manufacturer's second quarter saw more double-digit sales declines, and as is typical for many cyclical businesses, it reported an even larger earnings decline. Yet some signs indicated the worst of this cyclical downturn could be behind it. While revenue was down 16% and earnings per share fell 22%, that was a moderation from the 30% and 49% respective declines in the first quarter, which was a deterioration from the fourth quarter of the prior year, when revenue fell 28% and earnings per share were down 45%.
In profitability and cash flow terms, manufacturers typically see their margins shrink during periods of weak demand, and that's been the case for Deere. The good news is that gross margins are holding up, at 40.3% from 39.9% last year. Operating margin did fall 220 basis points (2.2 percentage points) to 18.1%, a relatively solid result considering the impact of lost revenue. In all, Deere was able to bring its costs and expenses down almost $1.7 billion in the quarter.
