Deere Q3 Profit Down On Weak Demand; Lifts FY16 Profit View

(RTTNews) - Agricultural machinery maker Deere & Co. (DE) reported Friday a decline in third-quarter net profit as sales were hurt by weakness in global markets for farm and construction equipment. Earnings per share, however, increased from last year. Further, the company lifted its forecast for fiscal 2016 net income. In pre-market activity on the NYSE, Deere shares were gaining 2.03 percent to trade at $78.50.

For the third quarter, net income attributable to the company declined 4 percent to $488.8 million from $511.6 million last year. However, earnings per share grew to $1.55 from $1.53 a year ago.

On average, 19 analysts polled by Thomson Reuters estimated earnings of $0.94 per share for the quarter. Analysts' estimate typically exclude certain special items.

Net income of the company's equipment operations increased, while Financial services' net income declined due to less-favorable financing spreads, and higher provision for credit losses. The company's financial services subsidiary, John Deere Capital Corp. posted lower profit.

Worldwide net sales and revenues decreased 11 percent to $6.724 billion from $7.594 billion last year. Net sales of the equipment operations fell 14 percent to $5.861 billion from $6.840 billion a year ago. Analysts expected sales of $6.09 billion.

Sales included price realization of 2 percent and an unfavorable currency-translation effect of 2 percent.

Equipment net sales in the United States and Canada decreased 16 percent for the quarter, and Outside the U.S. and Canada, net sales decreased 12 percent.

Samuel Allen, chairman and chief executive officer, said, "John Deere's performance in the third quarter reflected the continuing impact of the global farm recession as well as difficult conditions in construction equipment markets. All of Deere's businesses remained profitable with the Agriculture & Turf division reporting higher operating profit than last year."

Looking ahead, for fiscal 2016, the company now expects attributable net income of about $1.350 billion. The previous estimate was about $1.2 billion, which was cut in May from earlier expectation of $1.3 billion.

Company equipment sales are projected to decrease about 10 percent for fiscal 2016 and be down about 8 percent for the fourth quarter.

Deere's worldwide sales of agriculture and turf equipment would be down about 8 percent, and sales of construction and forestry equipment would be down about 18 percent.