Deere Reports Higher Quarterly Earnings

By CnAgri2012-08-16 19:45:57 Print

Farm-equipment manufacturer Deere & Co. said Wednesday it lowered its full-year forecast after missing third-quarter expectations due to weaker international demand and production delays. The Moline, Illinois-based company said its net income for the quarter rose 11 percent, to $788 million, or $1.98 per share, from $712 million, or $1.69 per share, a year earlier. Revenue was $9.6 billion. Analysts expected earnings of $2.32 per share, on revenues of $9.5 billion.

Deere lowered its full-year net income forecast to $3.1 billion from $3.4 billion. The company says it is facing weaker demand in South America, India and China for the company's agricultural machinery. They expect sales in Argentina to be down 5 to 10 percent due to economic uncertainty and a drought.

In North America, agricultural equipment sales are expected to be up more than 10 percent for the year, while European sales are expected to be flat.

Despite concerns that an ongoing drought in the U.S. would reduce sales of tractors and combines in 2013, Deere said it expects the dry weather to tighten global grain supplies, resulting in higher commodity prices and a robust 2013-growing season.

The U.S. is experiencing its most severe drought in at least half a century. The worry is that farmers will hold on to cash instead of buying equipment. Deere contended that most crop farmers have insurance to protect them from loses and that Congress is expected to provide disaster assistance to livestock farmers. That money, the company said, has historically been treated by farmers as regular revenue.