Deere lays off 220 employees, citing sales drop

30 Nov 2015 | Author: | No comments yet »

Deere Lays Off 220 Workers at Moline, Illinois Plant – Shares Inch Up Pre-Bell (NYSE:DE).

The world’s biggest pension fund posted its worst quarterly loss since at least 2008 after a global stock rout in August and September wiped $64 billion off the Japanese asset manager’s investments.Shares of Deere & Co. (DE) were edging higher pre-market Monday after the agriculture equipment company said 220 workers at the John Deere Seeding and Cylinder facility in Moline, Illinois will be laid off effective Feb. 15. The 135.1 trillion yen ($1.1 trillion) Government Pension Investment Fund lost 5.6 percent last quarter as the value of its holdings declined by 7.9 trillion yen, according to documents released Monday in Tokyo.

The layoffs are being implemented to better align the company’s manufacturing workforce with market demand and also reflect the company’s forecast provided last week for a year-on-year decrease in fiscal 2016 agricultural machinery sales. The fund lost 8 trillion yen on its domestic and foreign equities and 241 billion yen on overseas debt, while Japanese bonds handed GPIF a 302 billion yen gain. The loss was GPIF’s first since doubling its allocation to stocks and reducing debt last October, and highlights the risk of sharp short-term losses that come with the fund’s more aggressive investment style.

Fund executives have argued that holding more shares and foreign assets is a better approach as Prime Minister Shinzo Abe seeks to spur inflation that would erode the purchasing power of bonds. “Short term market moves lead to gains and losses, but over the 14 years since we started investing, the overall trend is upwards,” Hiroyuki Mitsuishi, a councilor at GPIF, said at a press conference in Tokyo. “Don’t evaluate the results over the short term, as looking over the long term is important.” GPIF had 39 percent of its assets in Japanese debt at Sept. 30, and 21 percent in the nation’s equities, according to the statement. Deere on Wednesday said it expects total equipment sales to drop about 11 percent in its first quarter, which began on Nov. 1, and fall about 7 percent for the fiscal year. Deere holds a roughly 60 percent share of the U.S. farm equipment market and relies on the United States and Canada for the bulk of its sales and revenue.

GPIF’s Japan equities slid 13 percent, the same decline posted by the Topix index, as China’s yuan devaluation and concern about the potential impact if the Federal Reserve raises interest rates roiled global markets. Deere Chief Financial Officer Raj Kalathur told analysts on a conference call that while the company forecasts its third straight year of declines in sales of agricultural equipment, it also expects to remain “solidly profitable.” “We are forecasting a very healthy level of cash flow of over $2.5 billion in 2016,” Kalathur said. “Our actions and proactively controlling expenses, costs, and managing assets have enabled us to deliver substantially better results than in any of the past downturns.” The U.S. Department of Agriculture on Tuesday said it expected U.S. net farm income to decline to $55.9 billion in 2015 from $90.4 billion in 2014 after reaching historic highs in 2013. Estimates” published on November 30, 2015, Benzinga.com published: “Credit Suisse Expects Deere To Outperform, But Lowers Its Estimates” on November 27, 2015. GPIF’s 0.6 percent return on Japanese debt compares with an 0.9 percent advance on a Bloomberg gauge of the nation’s sovereign bonds during the period.

The most recent results included returns from a portfolio of government bonds issued to finance a fiscal investment and loan program, with GPIF providing such figures since 2008. If those are stripped out, the drop was the fund’s third-worst on record, exceeded only by declines in the depths of the 2008 global financial crisis and the aftermath of the Sept. 11, 2001 terror attacks. Deere & Company – Receive News & Ratings Via Email – Enter your email address below to receive a concise daily summary of the latest news and analysts’ ratings with MarketBeat.com’s FREE daily email newsletter.

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