Dive Brief:
- Deere & Company achieved its highest production rates of the year in Q4, as the company plays catch-up on its order books to meet demand, executives said on a Nov. 23 earnings call.
- A work stoppage early in the year, combined with logistics and procurement disruptions throughout 2022, had put the machinery manufacturer behind on production, Brent Norwood, director of investor relations, said on the call.
- The company's order books are full up through Q3 of FY2023, CEO John May said on the call. Norwood also noted the high demand has led the company to put caps on its order books, which he said are filling up as soon as they open.
Dive Insight:
John Deere's FY2022 didn't start well.
In addition to supply chain issues, workers at some of Deere's largest U.S. factories went on a month-long strike, which caused a work stoppage. The company also contended with logistics issues that caused further production disruptions, as well as the war in Ukraine and its affect on Deere's assets.
All of these hurdles meant Deere had to play catch up later in the year, Norwood said on the Q4 call. The company pushed to produce more throughout the fiscal year, with the past quarter being its most successful.
"We ended up producing more in each successive quarter throughout the year with the fourth quarter being the high point," Norwood said. "We plan to keep those higher daily rates going into the first quarter of 2023."
Demand has stayed high as production has ramped up, too, despite pricing actions. Norwood said the company increased prices in the latter half of 2022, and may further increase prices for its 2023 order book, though it has not seen a drop in demand yet.
CFO Josh Jepsen said that while the company is seeing areas of improvement — it expects the cost of hot-rolled coil steel to ease, for example — the supply chain remains fragile.
"So we're not assuming that our operations return to normal levels of productivity and efficiency in our forecast," Jepsen said on the Q4 earnings call.