• Improving markets for farm and construction equipment contribute to higher results for both fourth quarter and full year.
• Performance shows continued benefit from advanced products, flexible cost structure.
• 2018 forecast calls for net income of $2.6 billion.

MOLINE, Ill. — Net income attributable to Deere & Co. was $510.3 million, or $1.57 per share, for the fourth quarter ended Oct. 29, 2017, compared with $285.3 million, or $0.90 per share, for the quarter ended Oct. 30, 2016. For fiscal 2017, net income attributable to Deere & Co. was $2.159 billion, or $6.68 per share, compared with $1.524 billion, or $4.81 per share, in 2016.

Worldwide net sales and revenues increased 23%, to $8.018 billion, for the fourth quarter and increased 12%, to $29.738 billion, for the full year. Net sales of the equipment operations were $7.094 billion for the quarter and $25.885 billion for the year, compared with respective totals of $5.650 billion and $23.387 billion in 2016.

“John Deere has completed another successful year as markets for farm and construction equipment showed improvement and our actions to build a more durable business model yielded strong results,” said Samuel R. Allen, chairman and chief executive officer, adding that the year’s sales and earnings were the fifth-highest in company history. “We saw higher overall demand for our products with farm machinery sales in South America making especially strong gains and construction equipment sales rising sharply. At the same time, the company realized continued benefits from its broad product portfolio and agile cost structure. As a result, Deere has remained well-positioned to serve present customers while making investments aimed at driving growth and attracting additional customers in the future.”

Investments made or announced during the year included the acquisition of the Wirtgen Group, the world’s leading manufacturer of road construction equipment. The transaction is expected to be finalized next month. “Wirtgen will establish Deere as a substantially more prominent player in global construction equipment markets,” Allen said.

Summary of Operations

Net sales of the worldwide equipment operations increased 26% for the quarter and 11% for the full year compared with the same periods in 2016. Sales included price realization of 1% for the quarter and full year, with a favorable currency-translation effect of 2% and 1% for the respective periods. Equipment net sales in the United States and Canada increased 23% for the quarter and 5% for the year. Outside the U.S. and Canada, net sales increased 30% for the quarter and 20% for the year, with a favorable currency-translation effect of 3% and 1%, respectively.

Deere’s equipment operations reported operating profit of $669 million for the quarter and $2.821 billion for the full year, compared with $354 million and $1.880 billion in 2016. The improvement for the quarter was primarily driven by higher shipment volumes, a favorable product mix and price realization, partially offset by higher production costs, higher selling, administrative and general expenses and an impairment charge for international construction and forestry operations. The full-year improvement was primarily due to higher shipment volumes, price realization and a favorable sales mix, partially offset by increases in production costs, selling, administrative and general expenses and warranty-related expenses. Full-year results also benefited from a gain on the sale of the company’s remaining interest in SiteOne Landscape Supply, Inc. (SiteOne).

Net income of the company’s equipment operations was $417 million for the fourth quarter and $1.707 billion for the year, compared with $185 million and $1.058 billion for the corresponding periods in 2016. The operating factors mentioned above affected both quarterly and full-year results.

Financial services reported net income attributable to Deere & Co. of $127.8 million for the quarter and $476.9 million for the year compared with $109.8 million and $467.6 million for the periods in 2016. The increases were largely due to lower losses on lease residual values, with full-year results partially offset by less-favorable financing spreads and higher selling, administrative and general expenses.

Equipment Division Performance

Agriculture & Turf. Sales increased 22% for the quarter and 9% for the year due to higher shipment volumes and the favorable effects of currency translation. Additionally, full-year results benefited from price realization.

Operating profit was $584 million for the quarter and $2.484 billion for the year, compared with $371 million and $1.700 billion for the respective periods of 2016. The quarter’s improvement was driven mainly by higher shipment volumes and a favorable sales mix, partially offset by increased production costs and higher selling, administrative and general expenses. Results were higher for the year primarily

due to increased shipment volumes, price realization and a favorable sales mix, partially offset by increases in production costs, selling, administrative and general expenses and warranty-related expenses. Full-year results benefited from a gain on the sale of Deere’s remaining SiteOne interest.

Company Outlook & Summary

Company equipment sales are projected to increase by about 22% for fiscal 2018 and by about 38% for the first quarter compared with the same periods of 2017. Included in the forecast is a positive foreign-currency translation effect of about 2% for the year and about 3% for the first quarter. Net sales and revenues are projected to increase about 19% for fiscal 2018, with net income attributable to Deere & Co. of about $2.6 billion.

The acquisition of the Wirtgen Group, expected to close in December 2017, is forecast to contribute about $3.1 billion in net sales in fiscal 2018. Wirtgen is expected to add about 12% to Deere’s sales for the full year and about 6% for the first quarter in comparison with 2017. After estimated expenses for purchase accounting and transaction costs, Wirtgen is expected to contribute about $75 million to operating profit and about $25 million to net income in fiscal 2018.

Allen reaffirmed his belief the future holds substantial promise for the company. "Thanks to the commitment of employees, dealers and suppliers, our plans for helping meet the world’s increasing need for food, shelter and infrastructure are making further progress. These broad trends remain quite compelling and are widely considered to have ample staying power. We have great confidence in the company’s present course and, backed by its impressive performance in 2017, firmly believe John Deere is positioned to deliver stronger, more consistent results in the future.”