Josh Rohleder
Manager-Investor Communications at Deere & Company
Good morning and an early happy holidays to everyone. John Deere finished the year with an excellent fourth quarter, thanks in-part to strong margins of 20.3% for equipment operations. Continued outperformance throughout the year resulted in 16% top line net sales and revenue growth for 2023. Operating margins came in for the year just shy of 22%, helping generate nearly $12 billion in operating cash flow. Across our businesses, performance was driven by strong market demand, operational execution and improved production costs.
Looking ahead to 2024, shifting ag market dynamics will lead to a decline in-demand. However, we expect to hold the structural gains in profitability achieved over the last few years, delivering expected decrementals off our 2023 baseline financial performance. Meanwhile, the construction and forestry market demand outlook remains mixed with uncertainty and housing and commercial investments, partially offset by tailwinds from mega projects and infrastructure spending.
Slide three opens with the results for fiscal year 2023. Net sales and revenues were up 16% to $61.3 billion. Our net sales for equipment operations were also up 16% to $55.6 billion. Net income attributable to Deere & Company was $10.2 billion or $34.63 per diluted share. Next, fourth quarter results are on slide four. Net sales and revenues were down 1% to $15.4 billion, while net sales for the equipment operations were down 4% to $13.8 billion. However, net income attributable to Deere & Company increased to $2.4 billion or $8.26 per diluted share.
Moving to slide five, we'll review our fourth quarter segment results, starting with our production and precision ag business. Net sales of $6.965 billion were down 6% compared to the fourth quarter last year. This was primarily due to lower shipment volumes, partially offset by price realization. Price realization in the quarter was positive by about 10 points. Currency translation was also positive by about one point. Operating profit was $1.836 billion, resulting in a 26.4% operating margin for the segment.
The year-over-year increase in operating profit was primarily due to price realization, partially offset by lower shipment volumes and sales mix, as well as higher SA&G and R&D spend. Notably, production costs came in favorable for the quarter. Recall that tough fourth-quarter year-over-year comps for PPA were expected due to supply-chain issues in 2022, which drove late shipments and out of season deliveries into the fourth quarter.
Turning to Small Ag and Turf on slide six. Net sales were down 13%, totaling $3.094 billion in the fourth quarter due to lower shipment volumes, partially offset by price realization. Price realization in the quarter was positive by nearly five points. Currency was also positive by approximately one point. For the quarter, operating profit declined year-over-year to $444 million, resulting in a 14.3% operating margin. The decrease was primarily due to lower shipment volumes and mix, along with higher SA&G and R&D expenses, partially offset by price realization and production costs.
Please flip to slide seven for the fiscal year 2024 Ag and Turf industry outlook. We expect large ag equipment industry sales in the US and Canada to decline 10% to 15%, reflecting softening sales on the heels of three years of strong demand, coupled with moderating farm fundamentals and high-interest rates, weighing on discretionary equipment purchases. Headwinds will be tempered by healthy farm balance sheet, declining input costs, supportive fleet fundamentals and continued profitability following record years. For Small Ag and Turf in the US and Canada, industry demand is estimated to be down 5% to 10%.
The dairy and livestock segment continues to remain steady, thanks to elevated protein and hay prices. This is offset by subdued demand in the turf and compact utility tractor markets, which are closely tied to single family home sales and home improvement spending, both of which remain under pressure from higher interest rates.
Shifting to Europe. The industry is forecasted to be down around 10%. Farm fundamentals in the region continue to be mixed with opposing dynamics between Eastern and Western Europe. Eastern Europe continues to be impacted by grain inflows from Ukraine, driving down commodity prices, while Western Europe remains profitable with favorable grain prices and declining input costs stabilizing equipment demand in 2024.
Dairy and livestock risks have also abated in recent months, with livestock prices forecasted roughly flat after coming down from record highs in early 2023 and dairy and cash flow beginning to bottom. In South America, we expect industry sales of tractors and combines to be down about 10%, moderated by strong headwinds during 2023. Brazil in particular was challenged with political uncertainty early on in a delayed government ag financing plan announcement. Coupled with already high-interest rates and lower commodity prices that reduced farm profitability, the cumulative impact of these headwinds ultimately led to slower retail sales in the second half of 2023.
This has been exacerbated most recently by severe dryness in Northern Brazil and flooding in the south to start the 2024 planting season. Across the rest of South America, elevated interest rates and heightened economic uncertainty, primarily in Argentina are further dampening expectations. Industry sales in Asia are also projected to be down moderately, notably with India, the world's largest tractor market by units down around 5%.
Turning to our segment forecast on slide eight. We anticipate production and precision ag net sales to be down between 15% and 20% in fiscal year 2024. The forecast assumes approximately 1.5 points positive price realization and flat currency translation. Segment operating margin forecast for the full-fiscal year is between 23% and 24%, reflecting our ability to sustain gains and structural profitability.
Slide 9 gives our forecast for the Small Ag and Turf segment. We expect fiscal year 2024 net sales to be down between 10% and 15%. This includes about one point of positive price realization and flat currency translation. The segment's operating margin is projected to be between 15% and 16%. Shifting to Construction and Forestry on slide 10, price realization and higher shipment volumes both contributed to an 11% increase in net sales for the quarter to $3.742 billion.
Price realization in the quarter was positive by over 6 points. This was supported by just over 1 point of positive currency translation. Operating profit increased to $516 million, resulting in a 13.8% operating margin. Favorable price realization more than offset higher production costs and unfavorable currency exchange during the quarter.
Slide 11 provides our 2024 Construction and Forestry industry outlook. Industry sales for earthmoving equipment in the US and Canada are expected to be down 5% to 10%, while compact construction equipment in the US and Canada is expected to be flat to down 5%. While end-market segments vary, oil and gas continues to be stable and while housing starts and non-res investments require caution due to the current interest-rate environment, US infrastructure and mega project spending supports continued equipment investment.
Global forestry markets are expected to be down around 10% as all global markets continue to be challenged. Global road building markets are forecasted to be roughly flat reflective of continued strong infrastructure spending in the US, offset by softening in Europe. Continuing with our C&F segment outlook on slide 12, 2024 net sales are forecasted to be down around 10%. Our net sales guidance for the year includes about 1.5 points of positive price realization and flat currency translation.
The segment's operating margin is projected to be between 17% and 18%, reflecting the continued structural shift in profitability for C&F. And ultimately, let's transition to our financial service operations on slide 13. Worldwide Financial Services net income attributable to Deere & Company was $190 million for the fourth quarter. The year-over-year decline was mainly due to unfavorable derivative market valuation adjustments, coupled with less favorable financing spreads and a higher provision for credit losses.
These factors were partially offset by income earned on a higher average portfolio. For fiscal year 2024, the net income forecast is $770 million. Results are expected to be higher year-over-year, primarily due to income earned on a higher average portfolio and a non-repeating one-time accounting correction that occurred in 2023. These will be partially offset by less favorable financing spreads and lower gains on operating lease residual values.
Finally, slide 14 outlines our guidance for net income, our effective tax-rate and operating cash flow. For fiscal year 2024, our full-year net income forecast is expected to be between $7.75 billion and $8.25 billion, demonstrating executional discipline despite increasing pressure from industry headwinds. Next, our guidance incorporates an effective tax rate between 24% and 26%. Lastly, cash flow from equipment operations is projected to be in the range of $8 billion to $8.5 billion.
To close, our ability to generate approximately $8 billion in net income at near mid cycle sales levels in fiscal year 2024 is a testament to the positive structural impacts we've seen from executing our strategy. This now concludes our formal remarks. Let's turn to a few key topics of interest before opening the line for Q&A. I'd like to start with the year end review before we jump to 2024. Not only did we have a record fourth quarter in terms of net income, but we finished the full-year with net sales and revenues, as well as net income eclipsing the $60 billion and $10 billion mark respectively.
Brent, can you breakdown what went well, both the quarter and the year?
