Deere Reports Record Profits, Showing That It Can Afford Raises For Workers

Deere & Co. is rich. And its earnings report shows that it has plenty to give workers.

Bloomberg reports:

“It’s a good thing for Deere & Co. that the company was able to come to an agreement with its striking workforce before the agricultural equipment giant reported its latest earnings. The update leaves no doubt that the company can afford to pay its employees a lot more.

Deere said on Wednesday that it earned $5.96 billion in net income for fiscal 2021. That’s a record and slightly exceeded the high end of the tractor-maker’s most recent guidance despite an Oct. 14 decision by more than 10,000 members of the United Auto Workers union to trade the assembly line for a picket line. The six-year agreement that the union voted to accept last week includes a 10% initial raise and is expected to result in incremental pre-tax costs of about $250 million to $300 million annually. That’s minor compared with the as much as $7 billion in net income Deere expects to generate next year alone.

It would have been understandable if Deere took a cautious view of 2022 given the strike and lingering supply-chain challenges that are crimping much of the industrial economy. That isn’t what it did; this outlook is the definition of robust. Deere forecast double-digit sales gains for each of its three equipment-related divisions as rising crop prices encourage farmers to replace aging machinery and the recently signed U.S. infrastructure bill kicks off a wave of construction spending. The company is also flexing its pricing power, with an eye-popping 9% increase planned for its large tractor and combine unit next year. Investors liked what the company had to say; shares were up more than 5% in early trading.”

For the rest of the story, visit Bloomberg here.

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