John Deere posts record profit despite strike
By Chris Isidore, CNN Business
John Deere posted record annual income Wednesday despite the recently concluded five-week worker strike, and it predicted another record year ahead.
The Midwest farm and construction equipment maker posted annual net income of nearly $6 billion, more than double the $2.8 billion it earned a year earlier and easily clearing its previous fiscal year record earnings of $3.5 billion reached in 2013. The company said it anticipates earning between $6.5 billion to $7 billion in the current fiscal year.
“Our results reflect strong endmarket demand and our ability to continue serving customers while managing supply-chain issues and conducting contract negotiations with our largest union,” said CEO John May. “Last week’s ratification of a six-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 company reported quarterly revenue and profits that easily topped both year-earlier results and Wall Street analysts’ forecasts. Shares of Deere rose 2% in pre-market trading on the results and strong guidance.
More than 10,000 members of the United Auto Workers union were on strike from October 14 through November 17. That only affected the last two weeks of the fiscal year that ended on Oct. 31. Deere did not break out the cost of the strike during the quarter or overall in its earnings report.
The strike continued that long because rank-and-file members rejected the first two tentative agreements reached between Deere and the union’s negotiating committee. Many members felt that the company was doing well enough financially to be able to afford a better offer than what had been proposed.
The strike was closely watched nationally and seen an an example of unions and workers flexing their muscle at a time of tight labor markets.
Last week, members finally ratified what the company called its best and final offer, one similar to the second offer that was rejected just two weeks earlier. The new contract includes an immediate 10% raise, an $8,500 signing bonus, two more 5% raises during the life of the contract, three lump-sum payments equal to 3% of annual wages and a cost-of-living adjustment to protect workers from the impact of higher prices.
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