Deere forecast tops estimates
Deere & Co. forecast a fiscal 2014 profit that exceeded analysts’ estimates.
The company predicted that higher construction and forestry equipment sales will help offset some of the decline in revenue from agriculture, its largest market.
Net income will drop to about $3.3 billion in the year through October, from $3.54 billion a year earlier, Moline, Ill.-based Deere said. While that’s the same as the company’s November projection, it’s more than the $3.13 billion average of 17 estimates compiled by Bloomberg. It maintained a forecast for a three percent drop for equipment sales.
Deere, the biggest maker of agriculture equipment, is facing its first drop in earnings in five years. It said that full-year sales at its agriculture and turf business, its largest unit, will fall by about six percent, while sales in the construction and forestry segment will rise about 10 percent.
U.S. building activity is recovering, with spending at its highest level since the aftermath of the financial crisis more than four years ago. Meanwhile sales to U.S. farmers are projected to fall as their earnings drop along with corn prices. Deere has declined 7.5 percent in the past year, while the S&P 500 Industrials Index has climbed 24 percent.
“Deere is underperforming because of concerns about the deteriorating outlook for agriculture,” said Lawrence T. De Maria, a New York-based analyst for William Blair & Co.
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