Sunday 29 November 2015

Deere annual report 2015

Deere, annual, 2015, front page

Since I bought Deere not that long ago as well as them having a broken year my first report summary therefore are based on their annual report for 2015. Upon the release of this report the share price increased with 4 to 5% which as always is based on the expectation of the analysts versus the real outcome. This time Deere apparently did better but the reading was not pleasant and the future expectations by the managers were not showing us the road to riches.

To read the report in full on the Deere home page then please click here and to find out more regarding Deere then please visit analysis of Deere.

The financial statement can be seen below. Looking at the revenue we have a drop of -20% which is a huge number! The large part is coming from the agricultural segment because the other segments have pretty much managed to hold their ground.

This is however what one have to love about American giant wonder companies. It is also one of the reasons why I have had no fear to jump into Intel, IBM and TJX AND the reason for why American companies are truly wonderful. They have a tough time and have -20% decreased sales AND STILL they make money! I honestly do not think that I would be able to take a single one of my European companies and show a -20% revenue decrease and still having them showing earnings below the line. None of them! But the Americans they do! Ok, enough of the praise to the Americans... Oh... and I still suffer from that I did not step into Disney when they were down below 100 USD. My gosh... I love everything they do then I should also own it!

Anyway back to Deere... they have managed to tighten up their costs significantly and have managed to decrease them by almost 20% also which, still in the end, leads to a bad yearly result but nothing compared to what it could have looked like. In the end we shareholders end up with 1.9 billion USD or 5.8 USD per share which should be compared to them paying out around 2.2 USD in dividend so it should still be ok.

Deere, annual, 2015, financial statement

Conclusion: Deere have had a tough year and they are expecting nothing else for 2016. Well, actually they expect it to be even worse which comes from not only decreased sales due to agriculture being tough right now but also due to increased value of the dollar which makes things even harder to sell. These things will always go up and down and given time it evens out. Last week I drove past a Deere sales hub and first I was happy to actually see some Deere machinery and secondly I was a bit heart broken to see so many of them. I will continue as a happy shareholder in Deere. 

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