Deere Raises Profit Forecast
Deere & Co, the world’s biggest maker of farm machinery, raised its 2017 profit outlook, drawing confidence from signs of increased demand in the construction and forestry industries as well as agriculture, according to the Bloomberg.
Sales of the company’s signature green-and-yellow agriculture and turf equipment will rise about 3 percent in the fiscal year through October, Deere forecast Friday as it published better-than-expected fiscal first-quarter earnings. The Moline, Illinois-based company said there are signs the worst may be over following a years-long industry slump.
For Deere’s smaller construction and forestry segment, the picture is brighter still, with sales seen climbing about 7 percent. Chief Financial Officer Rajesh Kalathur told analysts on a conference call that construction and forestry orders were up by more than a third in the first 13 weeks of the current quarter from a year ago in the U.S. and Canada. Deere also cited increased activity in oil and gas.
“Really what we saw in the quarter was a very, very strong order book,” Tony Huegel, a Deere spokesman, said Friday on a conference call with analysts. “That’s what’s driving that confidence.” Net income will be about $1.5 billion in the year through October, Deere said, exceeding both its own previous forecast and the average estimate among analysts of $1.4 billion. It also sees net sales increasing by about 4 percent for the year, from 1 percent previously. The shares erased some of their earlier gains, when they traded at a record high, and were up 0.2 percent to $109.42 in New York.
The company’s first-quarter earnings per share fell to 61 cents from 80 cents a year earlier, which beat the 55-cent average of 10 analysts’ estimates. Deere has now beaten expectations for 17 straight quarters. Net sales for the quarter fell to $4.7 billion from $4.77 billion, beating the average estimate of $4.63 billion.