Deer & Co. reported its third quarter net income of $1.7 billion on Aug. 15. Worldwide net sales and revenues decreased 17%, to $13.152 billion, for the third quarter of 2024 and decreased 11%, to $40.572 billion, for 9 months. Net sales were $11.387 billion for the quarter and $35.484 billion for 9 months, compared with $14.284 billion and $41.765 billion last year, respectively. 

Net sales for the Production & Precision Agriculture division were $5.1 billion, down 25% vs. $6.8 billion for the same quarter in 2023. 

In a note to investors, JP Morgan analyst Tami Zakaria wrote, “Overall, the implied outlook of modestly positive pricing in F4Q in Production & Precision Agriculture and $230 million of announced annual cost savings, of which $130 million is expected to be realized in 2025, should quell some concerns among long-term bulls, but tactical bears will likely find assurance that pricing could turn negative next year as Deere’s retail sales underperformed the North American industry’s declines in the quarter in all ag equipment categories except 2WD tractors while inventories were up modestly as well vs. last year.”

Deere’s outlook for fiscal 2024 is for net income of about $7 billion. “In response to weak market conditions, we have taken steps to reduce costs and strategically align our production with customer needs,” said chairman and CEO John May. “Although these decisions were difficult, they are vital for our continued success and competitiveness. 

Employee-Separation Programs. In its SEC filing Form 8-K for the quarter, Deere addressed recent layoffs, which it referred to as “employee-separation programs.” According to Deere,”the programs’ main purpose was to help meet the company’s strategic priorities while reducing overlap and redundancy in roles and responsibilities. The programs were largely involuntary in nature with the expense recorded when management committed to a plan, the plan was communicated to the employees, and the employees were not required to provide service beyond the legal notification period.”

According to the document, pretax expenses from the program are estimated at approximately $150 million, with $124 million recorded in 3Q 2024. The remaining expenses are expected to be recorded in 2025. 

Annual pretax savings from these programs are estimated to be approximately $230 million, of which $100 million is estimated to be realized in 2024.