Farm machinery sales grow despite drought
The drought this year devastated crops and stressed livestock, but so far it hasn’t slowed growth in at least one sector -- farm equipment sales.
Dan Grant
Published: Aug 31, 2012
Representatives of the ag equipment industry this week at the Farm Progress Show in Boone, Iowa reported robust sales so far this year.
In fact, Moline-based John Deere last month reported record net sales and revenue for its third quarter.
“We’re not seeing a big impact (on sales) from the drought, for now,” said Barry Nelson, manager of media relations for John Deere’s Ag and Turf Division. “We’re still showing record sales and profit.”
John Deere this month reported worldwide sales were up 15 percent from a year ago. The company forecast a record full-year income of $3.1 billion.
It may take time for the impact of the drought to catch up with equipment sales, though. Nelson noted many of the orders delivered this summer were placed last year.
Elsewhere, Burr Ridge-based CNH Global, the company created in 1999 when Case and New Holland merged, last month reported net sales for its second quarter were up 3 percent to about $5 billion. CNH sales were up 5 percent for ag equipment but down 3 percent for construction equipment.
“Firm global demand of agricultural equipment, on the back of favorable commodity prices, compensated for a more mixed trading environment in the construction equipment sector,” CNH noted in a news release.
Gary Wojcik, segment marketing manager of high horsepower tractors at New Holland, said high commodity prices and crop insurance should allow many farmers to trade equipment this year despite the loss of crop yields to the drought.
“We expect farm income will stay relatively constant, even with the drought,” Wojcik said. “Our first half of the year (sales) were up from the year before.”
Peoria-based Caterpillar also is in strong financial shape, despite the ongoing drought.
The company in July reported a second-quarter profit per share of $2.54, which was an all-time quarterly record and a 67 percent increase over profits in the second quarter of last year.
The equipment industry is reacting to the drought, however, and is prepared for a possible slow-down in sales in some regions of the country.
Curt Hoffman, of New Holland, reported some customers are taking a wait-and-see approach to see how harvest turns out before they make decisions about equipment. New Holland likely will increase incentives for customers, Wojcik noted.
Meanwhile, CNH is offering contoured payment schedules with CNH Capital for customers in USDA-designated drought counties to help growers sustain equipment for their farming operations.
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