Farm equipment maker Deere foresees sharp sales drop

MOLINE (AP) - The chairman and CEO of Deere & Co. says the agricultural equipment maker is preparing for the largest single-year sales drop in its 178-year history.

The (Moline) Dispatch (http://bit.ly/18peQJ8 ) reports Sam Allen talked about Deere's 2015 outlook at the annual stockholders meeting Wednesday. Sales are forecast to fall 17 percent this fiscal year from 2014, with earnings of $1.8 billion down from $3.16 billion in 2014.

The Moline, Illinois-based company is coming off its two most profitable years ever in 2013 and 2014. It made $3.5 billion in 2013.

Allen said Deere expects farm equipment sales to be about half this year what they were in 2013. The farm industry is "taking one of its periodic breathers" after a run of strong profits, he said.

"And though we can't say for sure, nothing at this point suggests the downturn will be long in duration," Allen said.

Deere spokesman Ken Golden said farmers have been hurt by commodity prices "that are lower than they have been in a significant amount of time."

"People usually re-invest in their business when their products are selling at a higher price," he said.

Deere had earnings of $386.8 million for the first three months of its fiscal year. That's down from $681.1 million from the same period a year earlier, but it still beat analyst expectations.

Allen said Deere is still in a good position to earn "solid profits" because of sales outside the U.S. agricultural industry. That includes dairy and livestock farmers in Europe and construction and forestry contractors "as far away as Brazil," he said.

Sales in construction and forestry rose 13 percent in the first quarter for Deere.

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Information from: The Dispatch, http://www.qconline.com