Feb. 26--Deere Chief Executive Sam Allen on Wednesday said 2015 "is shaping up to be a challenging year," citing a sharp drop in demand for agricultural equipment because of low commodity prices.
"We could be facing the largest single-year sales decline in the company's history with income at barely half of its 2013 peak," Allen said at its annual meeting with shareholders.
The Moline-based company expects sales to decline 17 percent in fiscal 2015. Earnings are expected to drop 43 percent to $1.8 billion. Last year, Deere posted a profit of $3.16 billion on revenue of $36.1 billion. Deere profit peaked at $3.5 billion in 2013.
Allen said demand has softened in particular for large equipment, which is more profitable. Sales for large machinery is expected to be half of what it was at its 2013 peak, a bigger decline than during any downturn since the 1980s.
Last week, Deere said earnings in the quarter ended Jan. 31 fell 43 percent to $387 million. Revenue fell 17 percent to $6.4 billion.
Deere has laid off about 2,000 workers as it aligns production with demand.
Allen added that while the farm economy is "healthy," the farm sector is taking what he called "a breather after a long stretch of exceptional performance and profitability." He said he doesn't expect the downturn to last long.
The world's population is expected to increase by about 30 percent to 9.6 billion by 2050, he said. And it is believed global agricultural output may have to double over the first half of the century to meet demand.
"Demand growth lies at the heart of our plans," he said.
acancino@tribpub.com
