 John Deere Forestry Oy made further progress in fiscal 2007 towards maintaining the position as the world's largest manufacturer and distributor of cut-to-length forestry products. Total revenues in fiscal 2007 grew by 13% compared to last year, and have grown at a compound annual growth rate of 16% since fiscal 2001. Sales of new goods, used goods and parts within Europe and Russia increased compared to last year reflecting strong demand for our products. Offsetting this positive sales growth trend are declines in the overall demand for forestry equipment in North America. Overall operating profit and net income of the company grew in 2007 compared to the prior period, mainly due to higher sales volumes, which were partially offset by higher material, distribution and other manufacturing expenses. Overall operating profit (or earnings before interest and taxes) of John Deere Forestry Oy for fiscal 2007 was 6% of revenues, compared to 4% last year.
The total forestry market was very strong in the sales area for John Deere Forestry Europe & Russia. Starting with a storm hitting southern Sweden in January, another storm was sweeping over Central Europe just a few days later. “This was driving a strong peak in our order intake, but instead of levelling-off, we faced a continuously stronger order intake, now driven by the general economy in Europe, resulting a high demand for forestry products”, says Arne Bergmann, Director of Sales & Marketing and Chairman of the Board for John Deere Forestry Oy.
All products (both Full Tree and Cut To Length method) order intake in 2007 increased by 41% compared to the previous year, and all products order backlog rose by +178% for the period. Growth realized in all markets with Russia being the highlight - where order intake nearly doubled versus the year before. John Deere enjoyed a strengthened position relative to products for the Full-Tree method in Russia, which still is the dominating logging method globally.
John Deere was investing intensively in its own subsidiaries during 2007. The UK retail was re-located into a new facility in Carlisle; the Finnish retail opened a new service centre in Joensuu next to the factory, the Norwegian retail opened a new training centre, and renovation is ongoing for the Swedish retail owned service facilities. Also the John Deere independent dealers throughout Europe continue to invest strongly into the business, while the company continues with its distribution development activities, marketing and business planning under the “Signature Process initiative”. John Deere honoured its dealer MERIMEX in Czech Republic with the “Dealer of the Year Award” for outstanding performance in their market area.
According to the company’s view, wood consumption will grow further in all markets in Europe & Russia. The continent’s bio-energy targets is leading in the mid-term to an increased bio-energy use of wood, swallowing a significant proportion of industry-grade timber. The supply of wood from European forests cannot meet the raising demand, therefore all sustainable available wood resources will be utilized, thus preconditions for logging equipment sales remain good in the future.
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