Deere misses profit estimates as tractor sales drop
Deere & Co., the world's largest farm-equipment maker, forecast fiscal 2015 profit that trailed analysts' estimates as farmers buy fewer high-horsepower tractors and combines after crop prices fell.
Earnings will be about $1.9 billion in the year through Oct. 31, 2015, Moline-based Deere said today in a statement. That missed the $2.19 billion average of 20 estimates compiled by Bloomberg.
Deere has already cut production and laid off hundreds of workers this year as plunging corn and soybean prices reduce North American farm incomes. Deere got 64 percent of its fiscal 2013 revenue from the U.S. and Canada.
"When farm cash receipts are down, there will be lower spending, especially on farm equipment," Matt Arnold, a St. Louis-based analyst for Edward Jones & Co. who recommends buying Deere shares, said in an interview last week. "Large, high- horsepower tractors and combines will be where the pressure will be."
Corn has dropped more than 50 percent and soybeans declined more than 40 percent from records in 2012. U.S. farm profit will fall an estimated 14 percent this year from last year's record, the Department of Agriculture said in August.
The number of combines industrywide in the U.S. sold this year through October tumbled 21 percent while tractors with at least 100 horsepower declined 11 percent, according to the Association of Equipment Manufacturers. Agco Corp., the world's third-largest agricultural-equipment maker, cut its full-year profit forecast on Oct. 7 for the second time on lower sales in all regions and a stronger dollar.
Net income for Deere's fiscal fourth quarter through Oct. 31 fell to $649.2 million, or $1.83 a share, from $806.8 million, or $2.11, a year earlier, Deere said. The average analyst estimate was $1.57 a share. Sales dropped to $8.97 billion.
(Deere scheduled a conference call at 10 a.m. New York time that can be accessed at http://bit.ly/1taTPVY.)
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