Iconic farm equipment manufacturer John Deere & Co. recently raised its sales projections for 2018, saying the agricultural and construction markets are looking up, and Deere is poised to take advantage.
News of the projections sent Deere & Co. stock climbing. This is great news for a brand that’s been mired in four consecutive years of rough sledding, thanks to weakened demand and lower grain prices worldwide. Now, though, Deere is projecting a double-digit percentage increase in demand, especially in the United States and Canada, the company’s two biggest markets.
The demand is mainly for replacement equipment, a Deere spokesman said, and that’s good news for the entire industry. When that many farmers are buying new equipment, they’re not betting on a good year this year, they’re betting on a lot of good years to come.
And then there’s the US housing market. As the number of available current homes continues to fall, builders are getting back to business, and Deere expects global construction equipment sales to jump by an incredible 80 percent through fiscal 2018, leading to a sales increase of nearly 30 percent this year alone.
These projections have been great news for Deere shareholders, who have seen their stock gain 50 percent in the past year and outperform the rest of the S&P 500 so far this year.
And Deere is not the only major equipment manufacturer looking forward to a flush 2018. Caterpillar’s earnings announcement also pleased stockholders and the national construction industry as a whole.
But there is one concern: supply may not be able to keep up with demand. It’s an issue that looms over this good news like a gray cloud. Shipping was slow, leading dealers to have to wait and buyers to get frustrated … or to shop elsewhere. If this continues, consumers may go elsewhere for their equipment needs, an eventuality Deere cannot afford.
The company said it will have a working solution to what’s causing the equipment delays later this year. In the meantime, they are hoping buyers are willing to be patient, at least in the short term.
The strength of and loyalty to the John Deere brand should buy them some time. The company is iconic for a reason. Generations of farmers and builders have trusted Deere to help them build their businesses, operations that are often passed down through the generations, along with that entrenched brand loyalty. So, there is some leeway, but if Deere doesn’t fix the delays, they might end up learning just how much.
About Ronn Torossian
Ronn Torossian is the Founder and CEO of 5W Public Relations. He is an experienced leader in the public relations industry with over 20 years of experience. Ronn Torossian has been named as Public Relations executive of the year by the American Business Awards, and has run countless award-winning Public Relations programs.
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