John Deere Committed to Those Linked to the Land

Transcription

1 John Deere Committed to Those Linked to the Land Deere & Company February / March 2012

2 Safe Harbor Statement & Disclosures This presentation includes forward-looking comments subject to important risks and uncertainties. It may also contain financial measures that are not in conformance with accounting principles generally accepted in the United States of America (GAAP). Refer to Deere s reports filed on Forms 8-K (current), 10-Q (quarterly), and 10-K (annual) for information on factors that could cause actual results to differ materially from information in this presentation and for information reconciling financial measures to GAAP. Guidance noted in the following slides was effective as of the company s most recent earnings release and conference call (15 February 2012). Nothing in this presentation should be construed as reaffirming or disaffirming such guidance. This presentation is not an offer to sell or a solicitation of offers to buy any of Deere s securities. 2 Deere & Company February / March 2012

3 Table of Contents Slide # John Deere Strategy 4 Macroeconomic Tailwinds 19 Foundational Success Factors 26 Global Markets and Opportunities 38 John Deere Financial Services 67 John Deere Power Systems 73 Farm Fundamentals 76 Market and Currency Volatility 85 Appendix 88 3 Deere & Company February / March 2012

4 John Deere Strategy

5 5 Deere & Company February / March 2012

6 The John Deere Strategy Our Purpose: Committed to those linked to the land No longer business as usual Global macro-trends present significant opportunities for John Deere Global population and income growth Global infrastructure needs New customer segments Technology advances 6 Deere & Company February / March 2012

7 The John Deere Strategy Realizing Sustainable Growth Through Global Expansion Sustainable SVA growth is delivered by distinctively serving our customers, employees, and investors Extend and enhance our financial and operating achievements of recent years Our challenge: to capture anticipated tailwinds by attracting more customers to the John Deere Experience across our six key geographies (US-Canada, EU 27, Brazil, CIS/Russia, India, China) in a manner that meets local needs while leveraging our global scale 7 Deere & Company February / March 2012

8 The John Deere Strategy Agricultural and Construction Equipment Aspirations Agricultural Equipment Solutions Strategy Defend and grow market share in developed markets Grow market share in developing markets Construction Equipment Solutions Strategy Continue to grow strong #2 position in North America Globalize the business 8 Deere & Company February / March 2012

9 The John Deere Strategy Performance Target Aspirations Sales Enterprise net sales of $50 billion at mid-cycle by 2018 Profitability Operating margins of no less than 12% at mid-cycle by 2014 Asset Efficiency Asset turns of 2.5 times at midcycle by 2018 Equipment Operations Equipment Operations 2010 Normal Volume $25 billion 6.6% 2018 Normal Volume $50 billion U.S. - Canada BRIC 12.3% 13.0% Rest of World 9 Deere & Company February / March 2012

10 The John Deere Strategy Integrated Enterprise Integrated portfolio of businesses, each with a vital and specific role Global Growth Businesses Agricultural and Construction Equipment Solutions Invest in global expansion for profitable growth by capitalizing on macro-trends Complementary Businesses Turf and Forestry Equipment Solutions Defend and grow share, enhance SVA, strengthen the channel of the Global Growth Businesses Supporting Businesses Financial Services, Power Systems, Worldwide Parts, and Intelligent Solutions Group Strengthen and further differentiate our Global Growth and Complementary Businesses 10 Deere & Company February / March 2012

11 The John Deere Strategy Foundational and Critical Success Factors Both Foundational and Critical Success Factors necessary to ensure that Deere is the provider of choice across the world FOUNDATIONAL SUCCESS FACTORS Building on the core strengths that have guided our success Exceptional Operating Performance Disciplined SVA Growth Aligned High-Performance Teamwork CRITICAL SUCCESS FACTORS Developing the capabilities essential to reaching our goals Deep Customer Understanding Deliver Customer Value World-Class Distribution System Grow Extraordinary Talent 11 Deere & Company February / March 2012

12 The John Deere Strategy Foundational Success Factors Exceptional Operating Performance - Equipment Operations 29.8% OROA in 2011, a record high for the company 35% 30% 25% 20% 15% 10% , adjusted* % % % % OROA (SVA Neutral) 5% % 80% Low % Normal % of Normal Volume *Excludes fiscal 2009 expenses related to goodwill impairment and voluntary employee-separation, for reconciliation to GAAP see 2009 OROA Reconciliation to GAAP slide in Appendix. 120% High 12 Deere & Company February / March 2012

13 The John Deere Strategy Foundational Success Factors Exceptional Operating Performance - Equipment Operations SVA Model: Higher Net Cash Flow, More Consistently 3,500 Adoption of SVA Model 3,000 Sale of Trade Receivables to Credit 2,500 $ Millions 2,000 1,500 1, Over $7 billion in Pension/OPEB contributions, Deere & Company February / March 2012

14 The John Deere Strategy Foundational Success Factors Disciplined SVA Growth - Equipment Operations SVA Journey, ,800 2,400 2,000 SVA ($ millions) 1,600 1, ,200-1, Note: For reconciliation of SVA to GAAP, please see Equipment Ops SVA Reconciliation to GAAP slide in Appendix 14 Deere & Company February / March 2012

15 The John Deere Strategy Foundational Success Factors Disciplined SVA Growth - Enterprise SVA Journey, SVA in 2011 was ~ $2.5 billion a record high for the company 2,800 2,400 2,000 SVA ($ millions) 1,600 1, Note: For reconciliation of SVA to GAAP, please see Equipment Ops SVA Reconciliation to GAAP slide in Appendix 15 Deere & Company February / March 2012

16 The John Deere Strategy Foundational Success Factors Aligned High-Performance Teamwork Integral part of strategy, reinforced with compensation Global Performance Management reinforces alignment Base pay changes linked to achieving goals STI: Short-Term Incentive Bonus focuses on OROA/ROE Covers most worldwide salaried employees Applies one enterprise-wide bonus metric MTI: Mid-Term Incentive Bonus driven by sustained SVA creation About 8,200 management employees eligible LTI: Long-Term Incentive Primarily stock options Top 900 employees eligible Minimum stock holding requirements for senior management (~ top 125) 16 Deere & Company February / March 2012

17 The John Deere Strategy Measures Commitment to execute and monitor all initiatives critical to our success Performance metrics Traditional financial measures based on what we are delivering today to our stakeholders Metric Target Sales Net Sales Growth Target $50B* (2018, at mid-cycle) Profitability Return on Sales (Operating Margin) 12% (2014, at mid-cycle) Asset Efficiency Asset Turns 2.5x (2018, at mid-cycle) *Implies a CAGR of ~ 9% ( ) vs. historical CAGR of 7-8% Performance metrics The qualities, attributes and actions being introduced to ensure the sustainability of our performance over time Exceptional Operating Performance Disciplined SVA Growth Aligned High- Performance Teamwork Quality Sales/SVA Mix by Geography Metric Employee Engagement Target % JDQPS certification % Non- U.S. & Canada Employee Survey s Engagement Index 17 Deere & Company February / March 2012

18 The John Deere Strategy In Summary Accelerated emphasis on global growth $50 billion mid-cycle sales by 2018 Approximately 50% outside of U.S. & Canada Capitalize on increased global demand for food, shelter and infrastructure Focus on improved profitability 12% mid-cycle margin by 2014 Continued adherence to OROA/SVA model 30% OROA at mid-cycle sales (12% at trough) with improved asset turns Focus on two growth platforms Global pre-eminence in agricultural-equipment solutions Global construction-equipment operations (with presence in China) Complementary/supporting businesses to help drive performance of global growth platforms Revised metrics reflect strategic direction Performance metrics align compensation to strategy Health metrics introduced to monitor underlying factors (e.g., market share, quality) to ensure performance is sustainable 18 Deere & Company February / March 2012

19 Macroeconomic Tailwinds Support John Deere s Global Growth Businesses

20 Long-Term Macroeconomic Tailwinds Support Global Growth Opportunities Population growing in size and affluence By 2050, world population will reach 9 billion, up from ~7 billion today, with most of population growth in Asia and Africa Large middle class developing in China and India Opportunity #1: Feeding the world Agricultural output must double by 2050 Gross output must increase 3.4% annually in the next 10 years vs. 2.4% annual growth in past 10 years Natural resources under strain, especially water Opportunity #2: Massive urbanization Migration from rural areas creates need for infrastructure development 2010: For the first time in history, more than half the world population lives in cities 2050: More than 70 percent will live in cities 20 Deere & Company February / March 2012

21 Strong Global Tailwinds in Ag & Construction Significant Growth from Developing Economies Agriculture and Construction amongst the Top 10 industry sectors in the G-20 countries Significant growth in Agriculture and Construction between will happen in the BRIC countries Sector Absolute increase in real value added , $ Billions CAGR Percent Sector Share of growth from BRIC 1 Manufacturing 3, Private Household Services 71% Real Estate and Business Activities 2, Agriculture 71% Wholesale and Retail Trade 1, Mining 61% Transport, Storage and Telecommunication 1, Manufacturing 58% Financial Intermediation 1, Utilities 58% Construction Transport, Storage and Telecommunication 49% Health and Social Services Construction 46% Public Administration and Defense, Compulsory Social Security Wholesale and Retail Trade 39% Education Financial Intermediation 36% Agriculture Public Administration and Defense, Compulsory Social Security 36% Social and Personal Services Education 34% Utilities Hotels and Restaurants 34% Mining Social and Personal Services 26% Hotels and Restaurants Real Estate and Business Activities 24% Private Household Services Health and Social Services 17% Note: G20 countries account for 73% and 89% of agriculture and construction segments respectively. Total global growth for agriculture is $520B and construction is $854B 1 Brazil, Russia, India, China Source: Global Insight World Industry Service Real value-added 2005 USD 21 Deere & Company February / March 2012

22 Developing Economies Growing Faster While developed economies have always accounted for a larger share of GDP their growth will slow significantly, relative to that of developing economies Real GDP 1 $ Trillions CAGR, Percent x 3.3 Real GDP 1 $ Trillions CAGR, Percent x Developing Developed 1 Real GDP (expenditure method) base year 2005 Developed countries include OECD. Developing countries include all developing markets (Regions as defined by Global Insight) Source: Global Insight World Market Monitor 22 Deere & Company February / March 2012

23 Dynamics of Food Demand Per Capita Income Services >$10 per day Processed Products $ per day Livestock Products 27% of world s population (Most hunger problems solved at $2.50 threshold) $ per day Commodities 20% of world s population (2/3rds experience hunger & malnutrition) <$1.25 per day Source: World Bank Deere & Company February / March 2012

24 Global Construction and Infrastructure Needs Infrastructure is expected to be the fastest growing segment of construction Estimated gross spending as a percent of 2008 global GDP Residential Non-residential Infrastructure WW Construction spending Gross output, $ 2008 Billions CAGR Percent Construction 12% Mining & Quarrying 7% Ag, Hunting, Forestry & Fishing 7% 3.6% 9,915 6,509 2, ,266 3, All Other 2,356 74% 1,888 3, *Note: Construction and Mines & Quarries account for ~5% and ~4% of 2008 value-added WW GDP, respectively Source: IHS Global Insight, March 2009; Off Highway Research; AEM; CCMA; Yengst; Deere analysis 24 Deere & Company February / March 2012

25 Global Construction Spending in 2020 Concentrated in a Small Number of Markets Construction spending 2020 absolute, Top 10 (Billions of 2009 $s) Construction spending change, Top 10 (Billions of 2009 $s) China 2,049 China 1,128 U.S. & Canada 1,508 U.S. & Canada 534 India 751 India 437 Japan 592 Infrastructure Brazil 168 Infrastructure U.K. 432 Non-residential Russia 106 Non-residential France Germany Residential All Construction U.K. Japan Residential All Construction Brazil 299 Indonesia 92 Russia 267 Mexico 60 Italy 257 Korea 57 China + U.S. & Canada 36% of 2020 absolute, compared to 30% today China + U.S. & Canada + Brazil, Russia, India 50% of 2020 absolute, compared to 40% today Source: IHS Global Insight, Deere Analysis, August Deere & Company February / March 2012

26 Foundational Success Factors Building on Core Strengths That Have Guided Our Success

27 Asset Management Dramatic Reduction in Asset Intensity Avoided ~ $5.5 billion in working capital in 2011 vs Receivable level in 2011 consistent with 1997, with almost 3x the sales Quarterly Receivables & Inventory as a % of Previous 12 Months Sales 60% $35,000 Trade Receivables and Net Sales 55% 50% Prior Year Current Year $30,000 $25,000 45% 40% 35% 30% 25% $ Millions $20,000 $15,000 $10,000 $5,000 20% * $0 Trade Receivables Net Sales *Through 1 st quarter Deere & Company February / March 2012

28 Productivity Improvement ~ 6% CAGR over 30 Years Deere s net sales and revenues per employee have increased at a CAGR of ~ 6% over last 30 years $600 Net Sales and Revenues per Employee $500 $400 $ Thousands $300 $200 $100 $ Deere & Company February / March 2012

29 Manufacturing Efficiencies Waterloo, IA Journey to a 6-Day Drive Train Days Relocation of 412 machines Eliminated 155 machines Days Machining departments based on part families Arranged machines using cellular concepts Started evacuation of multi-story buildings Production Days Days Total evacuation of multi-story buildings New heat treat fully operational Set-up improvement On-site forging storage Insourcing of core processes -2 Days Run size optimization and set-up improvement Daily run size parameters 5 Outsourcing non-core processes 0 Prior to Deere & Company February / March 2012

30 Investment in New Products and Technologies $1,400 R&D as Percent of Net Sales 6.00% $1,200 $1,000 $800 $600 $400 $ % 4.00% 3.00% 2.00% 1.00% $ % Deere R&D $ Deere % Competitor A % Competitor B % Competitor C % Source: Deere & Company and competitor SEC filings 30 Deere & Company February / March 2012

31 Net Sales by Product Category Equipment Operations - Fiscal Year 2011 Agriculture & Turf Construction & Forestry Turf Other CWP Other Large Ag Forestry Small Ag Construction 31 Deere & Company February / March 2012

32 Committed Bank Group Supports Credit Facility Average length of continuous relationship = ~29 Years $5.00 billion credit facility supporting commercial paper $2.75 billion 49-month facility expiring in 2015 $1.50 billion 37-month facility expiring in 2013 $750 million 364-day facility expiring in 2012 Have not drawn on facility $3.1 billion incremental capacity as of 31 January 2012 $6,000 Credit Facility Size & Commercial Paper Outstanding $5,000 $ Millions $4,000 $3,000 $2,000 $1,000 $ Total Facility CP Outstanding as of October Deere & Company February / March 2012

33 Deere Use-of-Cash Priorities Cash from Operations Committed to A Rating Manage the balance sheet, including liquidity, to support a rating that provides access to low-cost and readily available short- and long-term funding mechanisms Reflects the strategic nature of our financial services operation Fund Operating and Growth Needs Fund value-creating investments in our businesses Common Stock Dividend Consistently and moderately raise dividend targeting a 25%- 35% payout ratio of mid-cycle earnings Share Repurchase Consider share repurchase as a means to deploy excess cash to shareholders, once above requirements are met and repurchase is viewed as value-enhancing 33 Deere & Company February / March 2012

34 Worldwide Financial Services 2012 Unsecured Term Debt Maturities* $2,400 $2,200 $2,000 $1,800 $1,600 $ Millions $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 1Q 2Q 3Q 4Q USD CAD * Maturities as of 31 January Deere & Company February / March 2012

35 Share Repurchase As Part of Publicly Announced Plans Cumulative cost of repurchases Q2012: Amount remaining on May 2008 authorization of $5 billion: ~ $8.0 billion ~ $3.7 billion 31 January 2012 period ended shares (basic): ~ million Shares repurchased Q2012: (diluted): ~ million ~ million Average repurchase price Q2012: $54.86 Actual Shares Repurchased* (in millions) Total Amount** (in billions) $ $ $ $ $ $ $ $ YTD 4.9 $0.4 * All shares adjusted for two-for-one stock split effective 26 November 2007 ** Rounded totals for each period sum may not tie to cumulative cost of repurchases Deere & Company February / March 2012

36 Deere Quarterly Dividends Declared* Q Q $0.45 $0.40 $0.41 $0.35 $0.35 $0.30 $0.28 $0.30 $0.25 $0.20 $0.20 $0.22 $0.25 $0.15 $0.10 $0.11 $0.14 $0.16 $0.05 $0.00 '03 Q1 Q2 Q3 Q4 '04 Q1 Q2 Q3 Q4 '05 Q1 Q2 Q3 Q4 '06 Q1 Q2 Q3 Q4 '07 Q1 Q2 Q3 Q4 '08 Q1 Q2 Q3 Q4 '09 Q1 Q2 Q3 Q4 '10 Q1 Q2 Q3 Q4 '11 Q1 Q2 Q3 Q4 '12 Q1 * Adjusted for 2 for 1 stock split on 26 November Deere & Company February / March 2012

37 Sources and Uses of Cash Fiscal Equipment Operations $21,000 $18,000 $5,214 $638 $15,000 $748 $2,411 $ Millions $12,000 $9,000 $6,000 $16,378 $3,270 $6,194 $278 $3,000 $0 $4,287 Beginning Cash & Cash Equivalents (10/31/03) Cash From Operations Capital Expenditures Investment in Financial Services Divestitures, net of Acquisitions Net Change in Debt and Intercompany Balances ~58% of cash from operations returned to shareholders Dividends Share Repurchase, net of Common Stock Issuances Other (1) $3,188 Ending Cash & Cash Equivalents (10/31/11) (1) Other includes proceeds from maturities and sales of marketable securities and purchases of marketable securities and reconciliation for non-cash items including excess tax benefits from share-based compensation and the effect of exchange rates on cash and cash equivalents Source: Deere & Company SEC filings 37 Deere & Company February / March 2012

38 Global Markets and Opportunities

39 Growing Global Presence FY 2011 equipment net sales outside U.S. & Canada over 4x the level in FY 2000 $14,000 Net Sales Outside U.S. and Canada 50% $12,000 45% $ Millions $10,000 $8,000 $6,000 $4,000 $2,000 40% 35% 30% 25% $ % Net Sales Outside U.S. & Canada % of Total Net Sales 39 Deere & Company February / March 2012

40 Net Sales by Major Markets Fiscal Years 2011, 2010, 2009, 2008 (in millions of dollars) % Change United States 15,029 13, % 11,568 13,166 Canada 2,329 1, % 1,454 1,902 Western Europe 4,382 3, % 3,427 4,610 Central Europe & CIS 1, % 749 1,874 Central & South America 3,612 2, % 1,787 2,577 Asia, Africa & Middle East 1,930 1, % 1,166 1,062 Asia Pacific, Australia & New Zealand % Total 29,466 23, % 20,756 25, Deere & Company February / March 2012

41 U.S. and Canada Recent Announcements January 2012 Strategic agreement with MacDon to manufacture self-propelled windrowers December 2011 $85 million in capital improvements at Des Moines, IA factory to expand production of self-propelled sprayers August 2011 Largest, most significant product introduction in the company s history May R tractor differentiating through technology Single fluid, EGR it4 engine design validated Better fuel efficiency than 8430 and 8320R First row-crop tractor to break through 300 PTO hp barrier Factory installed JDLink TM to help increase customer profitability John Deere 8335R: Nebraska OECD Tractor Test 1990 Summary 758 John Deere 8320R: Nebraska OECD Tractor Test 1963 Summary 660 John Deere 8430: Nebraska OECD Tractor Test 1873 Summary 527 PTO Power Take-Off 41 Deere & Company February / March 2012

42 EU 27 Factory Locations Horst, The Netherlands Spraying Equipment Mannheim, Germany Tractors Arc-les-Gray, France Forage Equipment Balers Material Handling Equipment Joensuu, Finland Wheel Forwarders Wheel Harvesters Forestry Attachments Stadtlohn, Germany Forage Harvesters Headers Zweibrücken, Germany Combine & Forage Harvesters Material Handling Equipment Saran, France Engines Madrid, Spain Components Gummersbach, Germany Walk-Behind Mowers Bruchsal, Germany Tractor & Combine Cabs 42 Deere & Company February / March 2012

43 EU 27 Economic Data General (2010) Population ~ 516 million GDP (PPP) ~ $13.77 trillion Top four economies based on GDP: PPP: Purchasing Power Parity Source: FAO, Global Insight, The World Factbook Production Net Exports Total Grains 15% 4% Wheat 20% 7% Barley 39% 39% Pork Meat 22% 30% Cow Milk 27% 22% Source: USDA, 2011 Germany, UK, France, Italy Agricultural (2009) Utilized agricultural area ~ 192 million hectares Arable land ~ 111 million hectares Approximately 70 million hectares of permanent crop or grassland Share of the world market: GDP Composition 1.8% 25.0% 73.2% Agriculture Industry Services Source: The World Factbook, 2011 est. Labor Composition 4.7% 28.7% 66.6% Agriculture Industry Services Source: The World Factbook, 2010 est. 43 Deere & Company February / March 2012

44 EU 27 Economic Update Optimism continues in the Agricultural sector Farm business climate and mood remain at high levels Farm income expected to be above long-term average levels Grain, beef, and milk prices at attractive levels Demand for agricultural equipment strengthening Sovereign debt and fiscal issues concentrated in Southern Europe Not key agricultural markets Low levels of used equipment Deere & Company Forecast as of 15 February Deere & Company February / March 2012

45 EU 27 Recent Announcements November 2011 Awards received at Agritechnica R Tractor of the Year R tractor Machine of the Year Five silver medals June 2011 Largest new product introduction for Region 2* Over 100 new products 80% of large tractor and combine models new or updated Focus on Dealer of Tomorrow strategy May 2011 John Deere and Kuhn Group sign strategic cooperation Provides large square balers into Region 2* in 2012 * Region 2: EU 27, CIS (including Russia), Mediterranean countries in Africa, and the Near and Middle East 45 Deere & Company February / March 2012

46 EU 27 Government Support of Agriculture Common Agricultural Policy proposed budget frozen at nominal levels Rules generally known, eliminating uncertainty Redistribution of direct payments in favor of new member states EUR bn (nominal prices) Pillar I (Direct Payments + Market Expenditures) Pillar II (Rural Development) Source: EU Commission, Agra Europe 46 Deere & Company February / March 2012

47 Brazil Factory Locations Catalão, Brazil Sugarcane Harvesters Sprayers (planned) São Paulo, Brazil (JV) Sugarcane Equipment Indaiatuba, Brazil Backhoe Loaders 4WD Loaders Horizontina, Brazil Combine Harvesters Planters Indaiatuba, Brazil (JV) Excavators Montenegro, Brazil Tractors Deere & Company Forecast as of 15 February 2012 Existing Under Construction 47 Deere & Company February / March 2012

48 Brazil Economic Data General (2010) Population ~ 193 million GDP (PPP) ~ $2.172 trillion Top four cities based on population: São Paulo, Rio de Janeiro, Salvador and Brasília GDP Composition 5.8% 26.8% 67.4% Agricultural Brazil converted ~ 13 million hectares from pasture land into crop land in the last 10 years Soybean, Corn, Sorghum, Cotton, and Sugarcane Deere projects ~20 million hectares will be brought into production in the next decade Soybeans and corn Deere projects ~5% CAGR in industry equipment sales through the end of this decade Agriculture Industry Services Source: Brazilian Institute of Geography and Statistics (IBGE), 2010 Labor Composition 58% 18% 24% Agriculture Industry Services PPP: Purchasing Power Parity Source: Brazilian Institute of Geography and Statistics (IBGE), The World Fact Book Deere & Company Forecast as of 15 February 2012 Source: Brazilian Institute of Applied Economic Research (IPEA), Deere & Company February / March 2012

49 Brazil Recent Announcements October 2011 Two new factories in São Paulo to manufacture construction equipment Solely-owned Deere factory Backhoe and four-wheel-drive loaders Partner with Hitachi in second factory Excavators Expect production to begin in 2013 Agriculture portfolio and dealer expansion 50 new or updated products Dealer locations roughly doubled since 2007 Achieved 4 points of tractor market share in FY Deere & Company Forecast as of 15 February Carta da Anfavea, November Deere & Company February / March 2012

50 Brazil and Argentina Climate Impact % Normal Precipitation Upper South America December 2011 December Several outbreaks of oppressive heat engulfed southern Brazil and Argentina Moderate to severe drought impacts January Hot, dry conditions dominated southern Brazil and Argentina Harvest in N. Brazil hampered by wet conditions % Normal Precipitation Middle South America December 2011 February Improved moisture in some regions Corn and bean production cut Harvest and second crop corn planting in Mato Grasso impeded by wet weather Deere & Company Forecast as of 15 February 2012 (Previous Forecast as of 23 November 2011) 50 Deere & Company February / March 2012

51 Brazil Government Support of Agriculture R$123 billion approved for 2011/2012 Agriculture and Livestock Plan R$107 billion targeted towards Agribusiness (large-scale operations) 7% higher than 2010/2011 R$16 billion targeted towards family agriculture (small-scale operations) Government programs to support equipment purchases Tractor Programs 1 Engine hp Where Interest Rate Grace Period (Max) Term Maturity Mais Alimentos Pró-Trator Trator Solidário Brazil SP PR 2% 0% 5.5% 3 Years Perennial Dec11 Dec14 Finame PSI Moderfrota All All Brazil Brazil 6.5% to 8.7% 2 7.5%/9.5% Dec Jun12 Combine Programs 1 Class Where Interest Rate Grace Period (Max) Term Maturity Mais Alimentos IV Brazil 2% 3 Years 10 Perennial Finame PSI Moderfrota All All Brazil Brazil 6.5% to 8.7% 2 7.5%/9.5% Up to Dec12 Jun12 1 Exclusively Finame qualified products. Minimum of 60% local content (weight and value) % if annual gross revenue < R$90 million, 8.7% other farmers 3 7.5% if annual gross revenue < R$500 thousand and 80% of income from agriculture related activities. 9.5% all other farmers 4 Depending if used or new equipment and if equipment acquisition is isolated or in combination with implements 51 Deere & Company February / March 2012

52 CIS Factory Locations Orenburg, Russia Seeding Equipment Tillage Equipment Spraying Equipment Domodedovo, Russia Tractors Combine Harvesters Combine Front-End Equipment Backhoes, Loaders, Graders Skidders, Log Forwarders Orenburg, Russia Seeding Equipment Tillage Equipment Spraying Equipment Existing Under Construction 52 Deere & Company February / March 2012

53 CIS Economic Data General (2010) Population ~ 279 million GDP (PPP) ~ $2.81 trillion Top four economies based on GDP: Russia, Ukraine, Kazakhstan and Belarus Agricultural (2009) Utilized agricultural area ~ 560 million hectares Arable land ~ 196 million hectares Deere estimates western-style equipment used <25% of farmed hectares Share of the world market: Production PPP: Purchasing Power Parity Source: FAO, Global Insight, The World Factbook Deere & Company Forecast as of 15 February 2012 Net Exports Total Grains 10% 19% Wheat 16% 21% Barley 23% 15% Rapeseed 5% 14% Sunflower 49% 51% Source: USDA, 2011 GDP Composition (Russia) 4.2% 37.0% 58.8% Agriculture Industry Services Source: The World Factbook, 2011 est. Labor Composition (Russia) 9.8% 27.5% 62.7% Agriculture Industry Services Source: The World Factbook, 2010 est. 53 Deere & Company February / March 2012

54 CIS Recent Announcements November 2011 Orenburg, Russia Move existing operations to a new, larger facility Increase available manufacturing space by ~ 600 percent Expand product offering from four to fifteen models March 2011 Domodedovo, Russia Double manufacturing space at the factory Expand capacity for existing products Enable addition of new products such as log forwarders and front-end equipment 54 Deere & Company February / March 2012

55 CIS Government Support of Agriculture Export barriers lifted Russian grain export ban ended in July 2011 Ukraine s wheat and corn export duty ended in October 2011 Barley export duty ended in January 2012 Russian Ag funding is expected to increase in 2012 by ~ 7% in nominal terms Annual Ag support in the Russian National Ag Program for expected to more than double by 2020 in nominal terms, but can be shortened and/or restructured due to WTO requirements Ag modernization support, including machinery investments, expected to be $4.2 billion over 8 year period Loan interest rate subsidies may decline in favor of direct payments 55 Deere & Company February / March 2012

56 India Factory Locations Sirhind, India Combine Harvesters Pune, India Engines Transmissions Tractors Dewas, India Tractors Gummidipoondi, India (JV) Side-Shift Backhoes 4WD Loaders Deere & Company Forecast as of 15 February 2012 Existing Under Construction 56 Deere & Company February / March 2012

57 India Economic Data General Population ~ billion (July 2011 est.) GDP (PPP) ~ $4.463 trillion (2011 est.) Top four cities based on population (2011 est.): Mumbai, Delhi, Bangalore and Hyderabad GDP Composition 18.9% 18.2% 62.8% Agricultural Total land area ~ 2.9 million sq km Arable land ~ 1.5 million sq km (2005 est.) Annual industry tractor sales >500,000 units Farm income firm due to increased production and sustained exports Commodity prices expected to soften against 2011 but remain elevated due to strong demand Increased credit availability in the agricultural sector Infrastructure investment projected to be ~ 9% of GDP by 2012 (~5% in 2007) PPP: Purchasing Power Parity Source: The World Fact Book, Censusindia, Tractor Manufacturers Association of India Agriculture Industry Services Source: IHS Global Insight, 2010 est. Labor Composition 34.0% 52.0% 14.0% Agriculture Industry Services Source: The World Factbook, 2009 est. 57 Deere & Company February / March 2012

58 India Recent Announcements January 2011 New tractor factory in Dewas and expand current tractor facility in Pune ~ $100 million investment Expect production in Dewas to begin in 2013 October 2010 Ashok Leyland John Deere Construction Equipment Company inauguration Backhoes Four-wheel-drive loaders Production commenced in 2011 September 2010 New combine factory in Sirhind Production to commence February 2012 John Deere has been the largest exporter of tractors from India for past 7 years Deere & Company Forecast as of 15 February Deere & Company February / March 2012

59 India Government Support of Agriculture 2011F , F , , , , Fertilizer Subsidy Food Subsidy (for households) Irrigation Subsidy Electricity Subsidy Other Subsidies (mainly for seeds) ,000 1,500 2,000 2,500 Rupees (in billions) Source: India Ministry of Agriculture ( ), India Ministry of Finance ( ) 59 Deere & Company February / March 2012

60 China Factory Locations Jiamusi, China Combine Harvesters Corn Pickers Harbin, China Combine Front-End Equipment Tractors (150+ hp) Planters Sprayers Irrigation Products Tianjin (TEDA), China 4WD Loaders Excavators Tianjin (TEDA), China Engines Xuzhou, China (JV) Excavators Tianjin (TEDA), China Transmissions Tianjin, China (JV) Tractors ( hp) Ningbo, China Tractors (28-70 hp) Combine Harvesters Deere & Company Forecast as of 15 February 2012 Existing Under Construction 60 Deere & Company February / March 2012

61 China Economic Data General Population ~ billion (July 2011 est.) GDP (PPP) ~ $11.3 trillion (2011 est.) Top four cities based on population (2009): Shanghai, Beijing, Chongqing and Shenzhen GDP Composition 9.6% 43.3% 47.1% Agricultural Total land area ~ 9.6 million sq km Arable land ~ 1.4 million sq km (2005 est.) Share of the world market: PPP: Purchasing Power Parity Source: The World Factbook, USDA 2011 Production Total Grains 17% Wheat 17% Corn 22% Rice 30% Cotton 27% Agriculture Industry Services Source: The World Factbook, 2011 est. Labor Composition 34.1% 38.1% 27.8% Agriculture Industry Services Source: The World Factbook, 2008 est. 61 Deere & Company February / March 2012

62 China Recent Announcements May 2011 New engine facility in Tianjin ~ $60 million investment Expect production to begin in 2013 Construction Equipment (New) Engines (New) May 2011 New factory in Harbin ~ $80 million initial outlay Mid- and large-sized tractors Harvesting front-end equipment Planters and sprayers Irrigation products Expect production to begin in 2013 Drivetrain Office (New) Product Test (PV&V) Tianjin Economic-Technological Development Area (TEDA) Site December 2010 New construction equipment factory in Tianjin ~ $50 million investment Expect production to begin in 2013 Deere & Company Forecast as of 15 February Deere & Company February / March 2012

63 China Government Support of Agriculture 2011F Material Subsidy (basic subsidy for purchase of inputs) Grain Direct Subsidy (for growing encouraged crops) Seed Subsidy (for purchasing high-performing seed) Equipment Subsidy (for purchasing encouraged equipment) RMB (in billions) Source: China Ministry of Agriculture 63 Deere & Company February / March 2012

64 Worldwide Parts Services Supporting the Global Growth of Our Equipment Operations Recent announcements: November 2011 Bruchsal, Germany Inauguration of new deconsolidation & packaging facility within European Parts Distribution Center 3 largest Parts Distribution Centers Other Parts Distribution locations September 2011 Rosario, Argentina Construction of new, larger parts facility Deere & Company Forecast as of 15 February Deere & Company February / March 2012

65 John Deere FarmSight TM Integrated wireless technology linking the equipment, owners, operators, dealers, and agricultural consultants to provide more productivity to a farm or business. Machine Optimization Solutions that get the most out of machinery Use of precision technology and wireless data networks Higher levels of productivity and increased uptime Logistics Optimization Manage logistics and machinery from remote locations Fleet management solutions Increased machine-to-machine communication Ag Decision Support User-friendly monitors, sensors, wireless networks Easy access to machinery and agronomic data Enable proactive management decisions 65 Deere & Company February / March 2012

66 John Deere Water Leveraging our leadership in global agriculture to provide innovative and efficient agricultural water management solutions, and increase agricultural productivity Innovative solutions Efficient irrigation and water management Superior channel partners Integration of machinery and technology Consistent application of the right amount of water at the right time Enable increased yields and higher quality crops Improve water use efficiency and reduce input costs Partnering with our customers Optimize operations and output Enable good stewardship of water resources 66 Deere & Company February / March 2012

67 John Deere Financial Services

68 John Deere Financial Services Supporting the Global Growth of Our Equipment Operations New locations announced: China began operations 4Q 2011 Russia operations expected to begin 1H 2012 Chile operations expected to begin 1H 2012 India operations expected to begin 2H 2012 Thailand operations expected to begin 2H 2012 Deere & Company Forecast as of 15 February Deere & Company February / March 2012

69 John Deere Financial Services $28.1 Billion Owned Portfolio at 31 October 2011 Portfolio Composition by Market Portfolio Composition by Geography Portfolio Composition by Product C&F 13% Latin America 6% Australia 3% Revolving Credit 9% Europe 7% Leasing 12% Installment Financing 58% Canada 12% Ag & Turf 87% U.S. 72% Wholesale / Floorplan 21% Information above includes all Deere lending activities worldwide. John Deere Capital Corporation is the largest lending operation of Deere & Company. 69 Deere & Company February / March 2012

70 John Deere Capital Corporation Profitability and Growth Net Income ($ Millions) Administered Portfolio Growth ($ Billions) Write-offs/Average Owned Portfolio 0.28% 0.16% 0.22% 0.29% 0.33% 0.70% 0.48% 0.12% Deere & Company February / March 2012

71 John Deere Capital Corporation Retail Notes 60+ Days Past Due vs. Write-offs Agriculture & Turf 1 Extremely low write-offs; average less than 5 bps over last 10 years Even in severe Ag market of the 1980s, losses were comparatively low Construction & Forestry The performance and quality of portfolio improved during % 3.45% 2.95% 2.45% 1.95% 1.45% 0.95% 0.45% 3.95% 3.45% 2.95% 2.45% 1.95% 1.45% 0.95% 0.45% -0.05% '83 '86 '89 '92 '95 '98 '01 '04 '07 '10 Net Write-offs (Ag) Installments 60+DPD (Ag) -0.05% '95 '98 '01 '04 '07 '10 Net Write-offs (C&F) Installments 60+DPD (C&F) (1) includes Construction; includes Lawn & Grounds Care; beginning in 2009 includes both Ag and Turf equipment; As % of Owned Losses After Dealer Reserve Charges Source: internal reporting, JDCC 10-K filings, 2011 Deere & Company 8-K filed with SEC 23 November Deere & Company February / March 2012

72 U.S. Resale Value vs. Loan Balance 7830 Tractor and 9670 Combine 7830 Tractor (1) 110% 100% 9670 Combine (2) 110% 100% Resale Value as a % of Original List Price 90% 80% 70% 60% 50% 40% 30% 20% Loan Balance Resale Value as a % of Original List Price 90% 80% 70% 60% 50% 40% 30% 20% Loan Balance 10% 10% 0% Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Time Since Origination Model Year % Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Time Since Origination Model Year (1) Model 7810 was replaced with Model 7820 in In 2007 the 7830 series was introduced to the market. Loan balance assumes a 30% down payment on the highest list price financed for 5 years with annual payments at a rate of 6.50%. (2) Model 9650 was replaced with Model 9660 in Model 9660 was subsequently replaced with Model 9670 in Loan balance assumes a 30% down payment on the highest list price financed for 5 years with annual payments at a rate of 6.50%. Source for equipment values: North American Equipment Dealers Association 72 Deere & Company February / March 2012

73 John Deere Power Systems Engine Emissions and Technology

74 Tier 4 Engine Implementation Interim Tier 4 (IT4): 50% Nitrogen Oxide (NOx) reduction 90% Particulate Matter (PM) reduction 100 hp emission break removed Final Tier 4 (FT4): 80% NOx reduction 175 hp emission break removed Same regulations from hp Tier 1 PM, g/kw-hr Interim Tier 4 Tier 3 Tier 2 Final Tier NOx, g/kw-hr 74 Deere & Company February / March 2012

75 Interim Tier 4 Building on Proven Technology & Fuel Efficiency Decision to use cooled exhaust gas recirculation (EGR) with diesel oxidation catalyst (DOC)/diesel particulate filter (DPF) driven by customer focus and needs analysis A simple solution No additional fluids (Urea) More operator friendly Less complex to maintain A fuel efficient solution optimal performance & fuel-choice flexibility Tier 3/Stage IIIA cooled EGR John Deere 8320R rated the most fuel efficient tractor ever reviewed at the Nebraska Test Lab Operate efficiently with low-sulfur diesel and B5-B20 blends A field proven solution Since 2005, John Deere cooled EGR engines have a proven record of reliability in on-the-farm use An integrated vehicle solution John Deere designs, manufactures and services the engine, drivetrain, hydraulics, cooling and electrical systems John Deere Precision Farming Technology delivers input and labor savings to increase yields A fully supported solution John Deere dealers worldwide are highly trained to provide service and support as well as increase productivity / reliability / utilization of Deere machines 75 Deere & Company February / March 2012

76 Farm Fundamentals

77 U.S. Farm Cash Receipts Operating Cash Receipts and Government Payments Total cash receipts remain at historically high levels Record levels expected for 2011 $400 $350 $300 $ Billions $250 $200 $150 $100 $50 $ F 2012F Government Payments Total Cash Receipts Source: : USDA 13 February F 2012F: Deere & Company Forecast as of 15 February Deere & Company February / March 2012

78 U.S. Farm Balance Sheet Strong $2,500 30% 28% $2,000 26% 24% $1,500 22% $ Billions $1,000 20% 18% 16% $500 14% 12% $ F 2012F Farm Debt Farm Equity Debt to Equity Ratio (%) Debt to Asset Ratio (%) 10% Source: : USDA 13 February F 2012F: Deere & Company Forecast as of 15 February Deere & Company February / March 2012

79 Corn, Soybeans, Wheat and Cotton Prices Nearby Futures: 3 February February 2012 Corn Soybeans Dollars Per Bushel /3/07 2/3/08 2/3/09 2/3/10 2/3/11 2/3/12 Dollars per Bushel /3/07 2/3/08 2/3/09 2/3/10 2/3/11 2/3/12 Dollars per Bushel Wheat /3/07 2/3/08 2/3/09 2/3/10 2/3/11 2/3/12 Dollars per Pound Cotton /3/07 2/3/08 2/3/09 2/3/10 2/3/11 2/3/12 Source: Chicago Board of Trade Corn, Soybeans & Wheat; Intercontinental Exchange Cotton 79 Deere & Company February / March 2012

80 Agricultural Growth Energy 2007 U.S. Energy Bill Significantly expanded mandatory levels of renewable fuels Gallons (billions) Corn-Based Starch Ethanol Advanced Biofuels Source: Energy Independence and Security Act of Deere & Company February / March 2012

81 Uses of U.S. Corn Crop , % Bushels (millions) 20,000 15,000 10,000 5, % 35.0% 32.0% 29.0% 26.0% 23.0% % Feed & residual Food, Seed, & Industrial (Less Ethanol) Ethanol & By-Products for Fuel as % of Total Corn Usage Ethanol & By-Products for fuel Exports Source: USDA Agricultural Projections to 2021, February Deere & Company February / March 2012

82 World Farm Fundamentals Global Stocks-To-Use Ratios 70% 60% Cotton 50% 40% Wheat 30% 20% 10% Corn Soybeans 0% E 2011P Source: USDA - 9 February Deere & Company February / March 2012

83 Agricultural Growth Energy U.S. Ethanol 6,000 U.S. Corn Used In Ethanol 5,000 4,000 Bushels (millions) 3,000 2,000 1, /00 01/02 03/04 05/06 07/08 09/10F 11/12F 13/14F 15/16F Source: Informa January Deere & Company February / March 2012

84 Daily Ethanol Margin Per Bushel Corn Grind Based on Nearby Futures Prices (Excl ITDA*) $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 ($0.50) 2/3/08 5/3/08 8/3/08 11/3/08 2/3/09 5/3/09 8/3/09 11/3/09 2/3/10 5/3/10 8/3/10 11/3/10 2/3/11 5/3/11 8/3/11 11/3/11 2/3/12 *Interest, Tax, Depreciation and Amortization (ITDA) totals ~$0.50 and is often disregarded in margin calculations because it does not influence short term production decisions Source: Informa February Deere & Company February / March 2012

85 Market and Currency Volatility

86 Volatility / Uncertainty Metrics Updated as of 31 January 2012 Percentage Points Spread over Treasuries (bps) Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan VIX (Chicago Board Options Exchange Market Volatility Index) 2006 Avg.: Aug 08 Avg.: 20 Sep 08-Dec 09 Avg.: Avg.: Avg.: YTD Avg.: Jan 12: 19 'A' Industrial Index 3-Year Spread 2006 Avg.: Aug 08 Avg.: 113 Sep 08-Dec 09 Avg.: Avg.: Avg.: YTD Avg.: Jan 12: 59 0 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Spread over T-Bill (bps) Basis Points Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 1, TED Spread (Spread differential between 3M LIBOR and 3M T-Bill) GECC 5 Yr CDS 2006 Avg.: Aug 08 Avg.: 95 Sep 08-Dec 09 Avg.: Avg.: Avg.: YTD Avg.: Jan 12: Avg.: Aug 08 Avg.: 65 Sep 08-Dec 09 Avg.: Avg.: Avg.: YTD Avg.: Jan 12: Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan Deere & Company February / March 2012

87 Currency Movement Post Credit Crisis Weaker FC FY 2007 FY 2008 FY 2009 FY 2010 FY Indexed Value Stronger FC EUR GBP AUD JPY CAD BRL 87 Deere & Company February / March 2012

88 Appendix

89 Enterprise SVA Reconciliation to GAAP (millions of dollars unless stated otherwise) Equipment Operations Net Sales 11,077 11,703 13,349 17,673 19,401 19,884 21,489 25,803 20,756 23,573 29,466 Average Identifiable Assets With Inventories at LIFO 8,743 6,229 5,965 6,482 7,248 7,546 8,092 9,652 9,647 9,196 11,516 With Inventories at Standard Cost 9,678 7,147 6,925 7,477 8,312 8,634 9,205 10,812 10,950 10,494 12,875 Operating Profit (46) ,905 1,842 1,905 2,318 2,927 1,365 2,909 3,839 Percent of Net Sales -0.4% 3.4% 5.3% 10.8% 9.5% 9.6% 10.8% 11.3% 6.6% 12.3% 13.0% Operating Return on Assets With Inventories at LIFO -0.5% 6.4% 11.9% 29.4% 25.4% 25.2% 28.6% 30.3% 14.1% 31.6% 33.3% With Inventories at Standard Cost -0.5% 5.6% 10.2% 25.5% 22.2% 22.1% 25.2% 27.1% 12.5% 27.7% 29.8% SVA Cost of Assets (1,162) (858) (831) (897) (998) (1,036) (1,094) (1,284) (1,301) (1,259) (1,545) Equipment Operations SVA (1,208) (457) (123) 1, ,224 1, ,650 2,294 Financial Services Net Income Average Equity 2,115 2,177 2,265 2,227 2,466 2,524 2,355 2,732 3,064 3,194 Return on Equity 12.40% 15.20% 13.60% 15.50% 23.70% 14.40% 14.30% 7.40% 12.20% 14.70% Operating Profit Continuing Change in Allowance for Doubtful Receivables SVA Income Continuing Average Equity Continuing Operations 2,115 2,177 2,163 2,110 2,424 2,524 2,355 2,732 3,064 3,194 Average Allowance for Doubtful Receivables SVA Average Equity 2,276 2,337 2,328 2,260 2,572 2,691 2,538 2,927 3,296 3,194 Cost of Equity SVA Continuing Operations SVA Discontinued Operations Financial Services SVA (5) (148) Deere & Company - Enterprise SVA (462) (33) 1, ,314 1,702 (84) 1,715 2, Deere & Company February / March 2012

90 Equipment Ops SVA Reconciliation to GAAP (millions of dollars unless stated otherwise) Equipment Operations Net Sales 5,848 5,723 6,479 7,663 8,830 9,640 11,082 11,926 9,701 11,169 11,077 Average Identifiable Assets With Inventories at LIFO 5,585 5,765 5,449 5,551 6,187 6,502 6,682 7,672 7,724 8,069 8,743 With Inventories at Standard Cost 6,702 6,846 6,442 6,494 7,131 7,488 7,703 8,711 8,739 9,039 9,678 Operating Profit ,006 1,125 1,402 1, (46) Percent of Net Sales 0.3% 1.3% 3.7% 11.1% 11.4% 11.7% 12.6% 12.4% 2.8% 6.2% -0.4% Operating Return on Assets With Inventories at LIFO 0.3% 1.3% 4.4% 15.3% 16.3% 17.3% 21.0% 19.3% 3.5% 8.6% -0.5% With Inventories at Standard Cost 0.2% 1.1% 3.8% 13.0% 14.1% 15.0% 18.2% 16.9% 3.1% 7.7% -0.5% SVA Cost of Assets (804) (821) (773) (780) (856) (898) (924) (1,045) (1,049) (1,085) (1,162) SVA (788) (744) (531) (776) (392) (1,208) Equipment Operations Net Sales 11,703 13,349 17,673 19,401 19,884 21,489 25,803 20,756 23,573 29,466 Average Identifiable Assets With Inventories at LIFO 6,229 5,965 6,482 7,248 7,546 8,092 9,652 9,647 9,196 11,516 With Inventories at Standard Cost 7,147 6,925 7,477 8,312 8,634 9,205 10,812 10,950 10,494 12,875 Operating Profit ,905 1,842 1,905 2,318 2,927 1,365 2,909 3,839 Percent of Net Sales 3.4% 5.3% 10.8% 9.5% 9.6% 10.8% 11.3% 6.6% 12.3% 13.0% Operating Return on Assets With Inventories at LIFO 6.4% 11.9% 29.4% 25.4% 25.2% 28.6% 30.3% 14.1% 31.6% 33.3% With Inventories at Standard Cost 5.6% 10.2% 25.5% 22.2% 22.1% 25.2% 27.1% 12.5% 27.7% 29.8% SVA Cost of Assets (858) (831) (897) (998) (1,036) (1,094) (1,284) (1,301) (1,259) (1,545) SVA (457) (123) 1, ,224 1, ,650 2, Deere & Company February / March 2012