A five-week strike and supply chain challenges didn't put a damper on John Deere's earnings for the fourth quarter or the 2021 fiscal year.
The manufacturer announced Wednesday that profit was up 69 percent over Q4 2020 to $1.283 billion. For the 2021 fiscal year, Deere’s net income rose to $5.963 billion, compared with $2.751 billion in fiscal 2020.
"Deere's strong fourth-quarter and full-year performance was delivered by our dedicated employees, dealers, and suppliers throughout the world, who have helped safely maintain our operations and serve customers," says Deere chairman and chief executive officer John C. May. "Our results reflect strong end-market demand and our ability to continue serving customers while managing supply-chain issues and conducting contract negotiations with our largest union. Last week's ratification of a 6-year agreement with the UAW brings our highly skilled employees back to work building the finest products in our industries. The agreement shows our ongoing commitment to delivering best-in-class wages and benefits."
The ratification came after three offers to Deere’s 10,000-plus striking Union members. The six-year agreement includes an $8,500 signing bonus, 20% increase in wages over the lifetime of the contract with 10% of that increase occurring this year, a return to cost-of-living adjustments and three 3% lump-sum payments.
Meanwhile, construction and forestry sales rose by 14 percent compared to the same period in 2020 due to higher shipment volumes and price realization. Deere says it expects another strong year in 2022 and is projecting a 5 to 10-percent jump in sales of construction and forestry equipment in the U.S. and Canada.
"Looking ahead, we expect demand for farm and construction equipment to continue benefiting from positive fundamentals, including favorable crop prices, economic growth, and increased investment in infrastructure," says May. "At the same time, we anticipate supply-chain pressures will continue to pose challenges in our industries. We are working closely with our suppliers to address these issues and ensure that our customers can deliver essential food and infrastructure more profitably and sustainably."
Total net income for 2022 is forecasted to be in a range of $6.5 billion to $7.0 billion.