In its earnings release for its third quarter fiscal year 2023 earnings, Deere reported $15.8 billions in total net sales, up 12% year-over-year. Revenue in Deere's Production & Precision Ag (PPA) segment rose 12% to $6.8 billion in the quarter. PPA operating profit for the quarter was $1.8 billion, up 38% year-over-year. John Deere forecast its production and precision ag net sales for its full fiscal year 2023 to be up around 20% year-over-year.
Deere said in its earnings release that, "Production and precision agriculture sales increased for the quarter as a result of price realization. Operating profit rose due to price realization and improved shipment volumes / sales mix. These items were partially offset by higher production costs, increased SA&G and R&D expenses, and the unfavorable impact of foreign currency exchange."
Deere's Small Agriculture & Turf revenue for the quarter was $3.7 billion, up 3% year-over-year. Financial services revenue for the quarter was $216 million, a year-over-year increase of 3%.
In a note to investors, Managing Director, Senior Research Analyst with D.A. Davidson Michael Shlisky said Deere's results were ahead of the firm's models and consensus, saying the following:
Revenues beat our model by ~2.5%; segment operating profit was ~17% ahead and EBITDA was ~20% ahead. Gross margin expectations for the year were raised for the third straight quarter. DE also noted a "strong advance-order position," although no specifics were shared about FY:24. It's difficult to quibble with strong numbers like these, although some could question the outsized role of taxes in the guidance increase and the sustainability of pricing trends.
