(Bloomberg) -- Deere & Co. is promoting John May to lead the tractor-making giant through a tough agricultural environment, with outgoing Chief Executive Officer Samuel Allen, 66, to stay on as chairman.
The Moline, Illinois-based company is splitting up the CEO and chairman roles for now as it grapples with American farmers balking at equipment purchases amid a yearlong trade war with China and weather that has disrupted planting.
May was recently “put into the training ground to be promoted,” said Stephens Inc. analyst Ashish Gupta, serving as president and chief operating officer since April. He also headed China operations earlier in his career. May will join the board immediately and take over as CEO on Nov. 4. Gupta said he expected May to assume the chairman role next year.
The promotion was a “widely expected, traditional transition plan,” Gupta said. “Sam Allen has been long-serving, and John May has been in front of Wall Street,” having done meet-and-greets with analysts.
Deere has historically promoted from within, and former chief executive officers have been internal operating managers who assume chief operating officer roles ahead of time. May previously rain the company's agriculture division, as well as its precision agriculture business.
“I wouldn't anticipate any surprise, and we're not seeing that in the share price movement,” Chris Ciolino, an analyst for Bloomberg Intelligence said. Deere shares were little changed after the announcement. They gained as much as 2.7% earlier Thursday.
The company is engaging in a fresh cost-cutting drive to defend margins amid rising trade tensions and crop prices near multi-year lows.
Steps include boosting organizational efficiency through a footprint assessment. The company is also looking to make investments “with the most opportunity for differentiation,” including precision agriculture, it said earlier this month.
To contact the reporter on this story: Lydia Mulvany in Chicago at lmulvany2@bloomberg.net
To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net
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