26 February 1999

Big tackle makers feel pinch as farm prices stay weak

By Andy Collings

MACHINERY manufacturers are continuing to feel the effects of depressed agricultural commodity prices.

First quarter results for the period ending 31 Jan announced by Deere and Company reveal that net income fell by some $153.6m when compared with the same period last year. Net income was $49.7m against last years $203.3m.

Worldwide agricultural equipment operating profit totalled $25m for the quarter, compared with $206m last year.

According to Deere, the outlook for the coming year is not good. It predicts retail demand for farm equipment to decline by about 20% in North America and a decline of between 10% and 15% in other major markets.

Even so, Deere says it is entering this period of weakening demand for farm machinery in a strong financial position with performance supported by the companys non agricultural business.

As might be expected, sales of agricultural equipment manufactured by Case were also significantly down. Fourth quarter sales are reported to have fallen by 19% overall. In Europe, sales were down in all product lines – particularly high horsepower tractors and combines.