Deere earnings higher than expected
Deere & Co. posted higher-than-expected earnings, sending its shares up more than 8 percent as wider margins at its farm equipment and finance units helped it overcome weak economic conditions.
The company last week also raised its outlook for fiscal 2010 machinery sales growth to a range of 6 percent to 8 percent from a previous estimate that sales would fall 1 percent.
Profitability in the unit that makes Deere’s green tractors and harvesters was especially impressive, reporting margins of nearly 10 percent—three times what investors had expected, according to Eli Lustgarten, an analyst at Longbow Securities.
Deere, the world’s largest maker of agricultural equipment, reported a fiscal firstquarter net profit of $243.2 million, or 57 cents a share, up from $203.9 million, or 48 cents a share, a year earlier.
Revenue fell 6 percent to $4.84 billion.
Net income at the company’s financial services arm nearly doubled to $85.1 million, from $46.8 million last year, as the spread between Deere’s borrowing costs and the interest it charges customers widened.
Deere said commodity prices—and farm income— would remain healthy in 2010, supporting industry sales of farm equipment in the U.S. and Canada at levels comparable to those seen in 2009, but lifting sales in South America by 15 percent.
It warned, however, that industry sales in Europe, especially Central Europe and the former Soviet Union, would “remain under pressure as a result of challenging economic conditions and low levels of available credit.”
Deere, which also makes construction and forestry equipment, said it expected that business to remain “deeply depressed for the year as a result of a decline in non-residential construction and relatively high usedequipment levels.” — DTN