Deere Strike Legacy Will Bring Lumpy Restart to U.S. Factories
(Bloomberg) -- Deere & Co. is warning investors that impacts from its now-settled U.S. strike will hamper farm equipment production into the new year.
The lingering impacts of the four-week work stoppage will “neutralize” some of the ramp up in production it expected in the fiscal first quarter, Deere said Wednesday in its earnings call. While the tractor maker forecasts margins for the quarter ending Jan. 31 to be in the mid-to-high single digits, the U.S. plants affected by the strike will underperform that target.
“There are a few other one-time items that will provide some additional drag including ratification bonus,” Josh Jepsen, director of investor relations, said on the call. “Stepping back and just thinking about the full-year impact on margins, we say it will be about one point lower as a result of combination of work stoppage and some of the supply chain disruption.”
It’s not all bad news. While the Moline, Illinois-based company said it can’t offset the cost increases with price hikes in the first quarter, executives see that trend changing over the year as raises prices for tractors, combines and other machines it sells to farmers.
Deere reported earnings early Wednesday that showed the strike in the U.S. won’t significantly dent annual profit, with the company expecting record net income of between $6.5 billion and $7 billion for fiscal 2022.
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