John Deere sales continue to fall, dropping 22 percent in the past two years

The bottom has fallen out of the market for tractors and combines, with John Deere taking the biggest hit, Spencer Jakab reports for The Wall Street Journal. "Analysts see Deere’s revenue this fiscal year falling to $27.3 billion—a drop of 22 percent compared with two years earlier. Caterpillar’s sales are off, too, but by just half as much over the same period."

Record grain crops and train delays—blamed on increased shipments of oil and last year's bad winter—caused many farmers to store crops instead of selling for lower prices, which reduced the demand for tractors and combines and forced John Deere to announce plans last year to lay off 1,000 workers in Iowa.

Investors are expected today to report John Deere earnings of "$1.56 a share for the fiscal second quarter through April, down sharply from $2.65 a year earlier," Jakab writes. "During the fiscal first quarter, Deere’s U.S. and Canada equipment revenue fell by 14 percent, while it plunged by 28 percent everywhere else, exacerbated by the strong dollar. The company predicted global equipment sales would fall by 19 percent in the second quarter."

"Based on that, one would expect Deere’s share price to have trailed competitors in heavy-equipment manufacturing," Jakab writes. "Instead, it is the top performer with a drop of just 1 percent over the past year. That is perplexing since a turnaround isn’t expected soon. Based on forecasts going out to 2017, Deere’s earnings are seen remaining well below their fiscal 2013 peak." (Read more)