Earlier today, Deere & Company (DE) reported fiscal fourth quarter earnings of 23 cents per share (excluding goodwill impairment charges of 76 cents per share), which is well above the Zacks Consensus Estimate of 5 cents per share. However, quarterly earnings were down 72% year over year, primarily due to a double-digit decline in sales.

Quarterly revenue of $5.3 billion was down 28% from the prior-year period. Net sales from the company’s worldwide equipment operations dropped 30% year over year to $4.7 billion due to lower shipment and production volumes. Equipment net sales in the U.S. and Canada fell 26%, while the net sales outside the U.S. and Canada were down 35%.

Agriculture & Turf segment sales fell 26% due to lower shipment volumes, partially offset by improved price realization. The segment’s operating profit (excluding the goodwill impairment charge) was $389 million, compared to $460 million last year. Lower operating profit was driven by lower revenue, partially offset by a decline in raw material and SG&A expenses.

Sales in the Construction and Forestry segment were down 47%, reflecting a significant decline in shipment and production volumes. The segment posted operating profit of $2 million for the reported quarter, compared to $89 million last year. Lower shipment and production volumes were partially offset by improved price realization, lower raw-material costs and lower SG&A expenses.

For the full-year fiscal 2009, Deere posted net income of $2.84 per share, compared to previous-year EPS of $4.70 per share. Total sales for the year were down 19% at $23.1 billion, as farmers and other customers cut their spending under recessionary conditions.

Deere projects a 1% drop in for fiscal 2010 Incorporatedluding a 10% drop in the first quarter. The company’s forecast assumes a favorable currency translation impact of approximately 1% for the year and about 3% for the first quarter. Net income for fiscal 2010 is forecasted at around $900 million.

Full-year (fiscal 2010) sales from the Agriculture & Turf business are forecasted to decline 4% with lower expected sales from the U.S., Canada, and European markets and higher sales from South America. Construction and Forestry segment sales are expected to increase by about 18% in fiscal 2010, driven by aggressive inventory reductions made in fiscal 2009 to align the company’s production with retail demand.

We maintain a Neutral recommendation on Deere.

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