Nov 27, 2019

John Deere expects U.S.-China trade war to hurt its bottom line in 2020

A John Deere cotton stripper. Photo: Ivan Gubsky/TASS via Getty Images

John Deere said in its fourth-quarter earnings report on Wednesday that it expects lower earnings in 2020 due to a decline in worldwide equipment sales, Reuters reports.

Why it matters: The world's largest farm equipment manufacturer cited ongoing tensions from the U.S.-China trade war as well as harsh weather in the U.S. as factors that have led farmers and construction companies to decide against large new investments.

  • "John Deere’s performance reflected continued uncertainties in the agricultural sector. Lingering trade tensions coupled with a year of difficult growing and harvesting conditions have caused many farmers to become cautious about making major investments in new equipment," Deere CEO John May said in the report.

The big picture: Deere said it predicts sales of its agriculture and turf equipment will decline between 5% and 10%, while sales in its construction and forestry division may be down between 10% to 15%.

  • It also believes agriculture sales in the U.S. and Canada — its largest markets — will slump by 5%, citing decreasing demand.

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