Deere posts strong quarter, ups its earnings forecast

Deere posts strong quarter, ups its earnings forecast

Shares of Deere & Co. surged 6.5% in premarket trade Friday after the agriculture and construction machinery company reported fiscal second-quarter results that were well above expectations and provided an upbeat outlook.

Net revenue and sales worldwide were up 5% ending the quarter at $8.3 billion and increased by over 4% to more than $13.9 billion for the first six months of its fiscal year.

Net income attributable to Deere rose to $802.4-million, or $2.49 cents per share, in the second quarter ended April 30 from $495.4-million, or $1.56 cents per share, a year earlier.

The revisions came as Deere reported "signs of further stabilisation" in market conditions, after a downturn fuelled by the dent to farm incomes from weaker crop prices. "We are seeing modestly higher overall demand for our products, with farm machinery sales in South America experiencing a strong recovery".

For its first half of the fiscal year, attributable net income to Deere reached $996.3 million equal to $3.10 a share, in comparison to $749.7 million equal to $2.36 a share for the same six month period on year ago. Total equipment sales for the quarter rose 2.2% to $7.26 billion. The spring quarter is typically Deere's best of the year as farmers purchase equipment or replacement parts in advance of the spring planting season.

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In last quarter's release, Allen noted that the worst of that recession may be over.

Allen continues, "Deere is demonstrating a continuing ability to produce impressive results through all phases of the business cycle".

Industry sales of turf and utility equipment in the US and Canada are expected to be about flat for 2017.

Full-year 2017 industry sales in the EU28 member nations are forecast to be flat to down 5% due to low commodity prices and farm incomes. The company posted earnings of $1.52 billion for 2016.

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