Deere 3Q tops views, but 4Q sales worry investors
MOLINE, Ill. (AP) — Deere & Co.'s third-quarter net income rose 27 percent and easily beat most expectations as it benefited from the farm boom in North and South America.
However, it said that fourth-quarter equipment sales would fall 5 percent compared with a year earlier. The company said last year's fourth quarter brought "particularly strong" sales in part because factories were running quickly to catch up with customer orders.
The lower agriculture sales prediction "does not indicate any change in our outlook for demand or global ag fundamentals," Susan Karlix, Deere's manager for investor communications, said on a conference call.
Deere shares fell $1.57, or 1.9 percent, to close at $82.34 Wednesday.
The farm and construction equipment manufacturer earned $997 million, or $2.56 per share, well ahead of the $2.17 per share that Wall Street was looking for.
Revenue climbed 4 percent to $10.01 billion, the company said Wednesday, also topping most expectations of analysts polled by FactSet.
The company last year booked earnings of $788 million, or $1.98 per share.
For the three months ended July 31, worldwide equipment sales increased 4 percent on higher prices. Equipment sales rose 4 percent in the U.S. and Canada and 5 percent in other regions.
Agriculture and turf segment sales rose 8 percent on increased prices and higher shipment volumes. Construction and forestry sales fell 11 percent on lower shipment volumes.
For the fourth quarter, Deere anticipates equipment sales falling about 5 percent as it faces a tough year-ago comparison because factories were working quickly to catch up with customer orders at that time.
The Moline, Ill., company foresees full-year equipment sales rising approximately 5 percent and agriculture and turf sales increasing about 7 percent. Construction and forestry equipment sales are predicted to drop about 8 percent, mostly due to a cautious outlook on U.S. economic growth.