Deere & Co.'s ability to remake its business model during a the recent agricultural downturn has positioned it for growth as well as increased value for customers and investors, Chairman CEO Samuel Allen told the company's stockholders Wednesday.
While equipment markets did rebound in 2017, he said the company emerged stronger because "John Deere has found more and better ways to run the company."
For three years during "a wrenching agricultural downturn," Deere shaved costs and shed assets to keep a "balance sheet in sound shape," he said.
But one area where it did not cut back was on investing in the future, including expanding into new products, technologies and markets, Allen told the standing-room only crowd at John Deere World Headquarters in Moline.
Deere's $5 billion-plus acquisition of the German company Wirtgen Group last year was highlighted in a video that featured the global road construction equipment manufacturer's operations and the capabilities of its heavy equipment. The acquisition, the largest in Deere's history, supports the company's "aim for achieving more global scale in construction equipment," Allen added.
The year also saw the acquisition of Blue River Technology, a company with a new technology that uses cameras and artificial intelligence to help farmers apply chemicals with great accuracy, he said. "We believe it has potential to greatly reduce the use of chemicals in the farm field ..."
Shareholders also heard several mentions of Deere's history, including in a video that focused on the evolution of its products and the generations of families it has employed. In 2018, Deere will mark the 100th anniversary of its entrance into the tractor market and its acquisition of Waterloo Gasoline Engine Co., maker of the Waterloo Boy tractor.
"For all the success our company has enjoyed for the last 180 years, there is no doubt in my mind that our best days are still to come," Allen said to the nearly 400 shareholders, including many Deere employees and retirees.
Looking ahead, he said the company expects sales and demand for its products to improve in 2018.
Shareholders also were reminded of the strength of Deere's stock last year as Allen pointed out a run-up of more than 50 percent. "Counting dividends that comes to around $15 billion in additional value for stockholders last year — not to mention another $10 billion or so of further gains in the current fiscal year."
In an interview after the meeting, Deere spokesman Ken Golden the company's business model of "running very efficiently and lean has definitely added to the bottom line."
Echoing Allen's remarks, Golden said global tailwinds will drive greater demand for Deere machinery and advanced technologies. The macro-economic trends will include a growing global population, an emerging middle class that will have better diets, and a move to urbanization, which will increase the need for construction equipment.
"More infrastructure around the world will happen," he said. "It has to happen."
In fact, Allen told the shareholders that agriculture production will have to increase to meet the growing population's needs. "Some say it may have to double over the first half of the century to keep pace with demand," he said. "Clearly, it's something that will require a greater reliance on mechanization and productive equipment to achieve."
The positive outlook and Deere acquisitions enthused shareholders such as former East Moline Mayor John Thodos.
"Deere has always been able to position itself in a way that it can bounce and leverage my investment and as a shareholder that's a good thing," Thodos said.
Tony Knobbe, a shareholder and chairman of Gathering of the Green, a gathering of John Deere enthusiasts, said Deere's purchase of the Waterloo tractor company a century ago changed the company's legacy.
"For its first 80 years, it was a tillage company," he said. "But for that decision (to buy Waterloo), we probably never would have heard of John Deere."