John Deere Financial Services reported net income of $153.0 million for the fourth quarter of 2015 (to Oct 31) and $632.9 million for the year. This compares with $172.2 million and $624.5 million respectively in 2014. Lower results for Q4 were primarily due to the unfavorable effects of foreign-currency exchange translation, and higher losses on residual values primarily for construction-equipment operating leases, partially offset by lower selling, administrative and general expenses. Results for full-year 2015 improved due to growth in the average credit portfolio, the previously announced crop insurance sale and higher crop insurance margins experienced prior to divestiture, and lower selling, administrative and general expenses. These factors were partially offset by the unfavorable effects of foreign-currency exchange translation, less-favorable financing spreads, and higher losses on residual values primarily for construction-equipment operating leases. The results come as its parent, Deere & Company, reports a weakness in global markets for farm and construction equipment which has led to a decline in sales and earnings for quarter and full year. Worldwide net sales and revenues for Deere & Company products decreased 25%, to $6.715 billion, for the fourth quarter and were down 20%, to $28.863 billion, for the full year. Net sales of the equipment operations were $5.932 billion for the quarter and $25.775 billion for the year, compared with $8.043 billion and $32.961 billion for the same periods in 2014. "Adept execution" Samuel R. Allen, chairman and chief executive officer stressed defensively: "John Deere has completed a successful year in the face of further weakness in the global agricultural sector and a slowdown in construction-equipment markets. "Sales and earnings for the year were the sixth-highest in company history, a notable achievement in light of the challenging market conditions we experienced. The company's performance benefited from the adept execution of our business plans and disciplined cost management. As a result, Deere remains well-positioned to serve its customers while continuing to make investments in quality and innovation that are designed to drive growth in the future." Nevertheless, the financial news was followed by a statement from the company that it had informed “approximately 220 employees at John Deere Seeding and Cylinder in Moline, Illinois, that they will be placed on indefinite layoff, effective February 15, 2016”. Employees were informed of the layoff today in meetings at the Moline facility. The layoffs reflect Deere’s forecast that agricultural machinery sales will decrease in fiscal year 2016. Deere said the actions are taken to align the size of the manufacturing workforce at individual factories with market demand for products made at each specific location. In the past, manufacturing employees at John Deere Seeding and Cylinder have experienced seasonal layoffs in the spring and returned to work in the fall. Today's announcement is an indefinite layoff with no specific call-back date. Equipment net sales in the US and Canada decreased 23% for Q4 and 18% for the full year. Outside the US and Canada, net sales fell 31% for the quarter and were down 28% for the year. Allen forecast that company equipment sales are projected to decrease about 7% for fiscal 2016 and to be down about 11% for the first quarter compared with year-ago periods. "Although our forecast calls for lower results in the year ahead, the outlook represents a level of performance that is considerably better than we have experienced in previous downturns," he said. "This shows the continuing success of our efforts to establish a more durable business model and a wider range of revenue sources." Financial Services forecast to dip in 2016 Fiscal-year 2016 net income attributable to Deere & Company for the financial services operations is expected to be approximately $550 million. The outlook reflects less-favorable financing spreads and an increased provision for credit losses. Additionally, 2015 results benefited from a gain on the sale of the crop insurance business. Source - http://www.assetfinanceinternational.com