Deere & Co. saw a 38-percent drop in corporate profits during their second quarter and predicted that its 2009 profits would decrease by 27 percent.
Deere attributes their lower profits to the recession and lower crop prices. It believes the global economic status have made it difficult for farmers to get loans for machinery. Crops have also sunk from last year’s record high prices. Without that income, there’s less to spend on machinery.
Deere’s biggest revenue gainer, its tractors and agricultural equipment series, lowered by 4 percent in sales. Similarly, its commercial and consumer lines saw 24-percent sales decrease, and its construction and forestry division dropped by 55 percent.
To cut costs, Deere laid off 1,000 employees this year but has rehired 68. In other efforts, Deere also restructured its agricultural and commercial divisions by combining the operations.
Deere’s share prices slipped by a $1.22 to 42.60 a share, a 2.8 percent decline. However, share prices rose in March and April when investors took note of the cost-cutting strategies. Deere predicts total 2009 net income to come in at $1.1 billion instead of its previous $1.5 billion projection earlier this year.