Deere tops second-quarter estimates, trims annual profit forecast
Reuters — Deere & Co cut the lower end of its annual profit forecast on Thursday but topped Wall Street expectations for second-quarter results aided by cost-saving measures and inventory management, sending its shares up five per cent.
Farmers facing high interest rates and weaker crop prices are leaning more towards renting rather than buying machinery, hitting sales of big-ticket equipment such as tractors and combines.
Deere was able to cushion the blow from softer demand and keep its margins steady by lowering production and warranty-related expenses.
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The company would continue to make “significant investments” in its core U.S. market, Deere said.
Peer CNH Industrial slashed its annual profit forecast earlier this month, citing a hit from lower shipments due to cooling demand and dealer destocking.
Deere and CNH struggled to keep pace with strong tractor demand in 2022, when farm income hit a record high and pandemic assistance payments gave farmers extra money to upgrade their fleets.
The world’s largest agricultural-equipment maker expects its annual net income to now be between $4.75 billion and $5.5 billion, compared to its prior forecast of $5 billion to $5.5 billion.
Its revenue for the second quarter fell about 18 per cent to $11.17 billion from last year, compared to analysts’ estimate of about $10.8 billion, according to data compiled by LSEG.
Quarterly net income fell to $1.8 billion or $6.64 per share, compared with $2.37 billion or $8.53 per share a year ago. Analysts on average had expected the company to report a profit of $5.58 per share.
Source: Farmtario.com