Deere Net Beats Estimates as Global Farm-Equipment Demand Gains
Deere & Co. (DE), the world’s largest farm-equipment maker, posted fiscal third-quarter profit that topped analysts’ estimates and raised its full-year earnings forecast as global demand improved.
Net income gained 15 percent to $712.3 million, or $1.69 a share, in the quarter through July, from $617 million, or $1.44, a year earlier, Moline, Illinois-based Deere said today in a statement. The average estimate of 12 analysts in a Bloomberg survey was for earnings of $1.67 a share. Sales rose 22 percent to $8.37 billion from $6.84 billion.
Profit will be $2.7 billion in the year ending Oct. 31, more than the $2.65 billion forecast in May. The average estimate of eight analysts in the Bloomberg survey was for net income of $2.72 billion.
Deere is aiming to double annual sales to $50 billion by 2018 and raise the proportion of revenue from outside the U.S. and Canada to 50 percent from 35 percent in fiscal 2010. Agriculture industry sales in western and central Europe will climb 10 percent to 15 percent in its current financial year, Deere said.
“Deere’s array of over 100 new products in the region and a renewed focus on its dealer network are contributing to the company’s outperformance in key countries,” Ann Duignan, a New York-based analyst for JPMorgan Chase & Co. who rates the shares “overweight,” said in a report on Aug. 15.
Shares of Deere dropped $1.34, or 1.8 percent, to $75.16 as of 4:15 p.m. in New York Stock Exchange composite trading yesterday. They have declined 9.5 percent this year, while the Standard and Poor’s 500 Index has fallen 5.2 percent.
Tractor sales in Western Europe rose about 14 percent in the first half of 2011 as dairy and livestock markets improved, Duluth, Georgia-based manufacturer Agco Corp. said last month.
Corn futures in Chicago have gained 72 percent over the last 12 months while soybeans have increased 31 percent as a drought in the U.S. reduced yields and tightened crop inventories. U.S. cash receipts from major crops, an indicator for equipment sales, will rise 23 percent to $149.6 billion in the 2011-2012 crop year from a year earlier, according to a JPMorgan estimate.
“These projections continue to support strong farm income expectations for the year and continued equipment demand,” Duignan said in an Aug. 11 report.
(Deere is scheduled to hold a conference call for analysts at 10 a.m. New York time. Dial: +1-630-395-0143, pin 9518.)
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