Deere Q3 Results Top Estimates, Lifts FY13 Profit View

(RTTNews) - Farm & construction machinery maker Deere & Co. (DE) posted Wednesday a 26 percent increase in third-quarter profit, benefited by higher results in farm machinery and financial services. Earnings per share significantly surpassed analysts' estimates, with net sales also beating view. Noting that it is poised for a very successful 2013, the company lifted its fiscal 2013 profit forecast.

Chairman and Chief Executive Officer Samuel Allen said, "Deere's success is a reflection of considerable strength in the farm sector, especially in North and South America. We also are making further progress executing our wide-ranging operating and marketing plans, which call for expanding our global market presence while keeping a close watch on costs and assets."

For the third quarter, net income attributable to the company climbed to $996.5 million or $2.56 per share from $788.0 million or $1.98 per share, a year before. On average, 18 analysts polled by Thomson Reuters expected earnings per share of $2.17 for the quarter. Analysts' estimates typically exclude one-time items.

Equipment operations segment's profit was boosted primarily by the impact of price realization and higher shipment volumes. Financial services segment's profit was aided by growth in the credit portfolio and improved crop insurance margins, partly offset by an increased provision for credit losses.

Quarterly net sales and revenues increased 4 percent to $10.01 billion from prior year's $9.59 billion. Net sales of the equipment operations grew 4 percent to $9.32 billion, whereas 11 analysts estimated revenues of $9.29 billion for the period.

The company said its net sales included price realization of 3 percent and an unfavorable currency-translation effect of 1 percent. Equipment net sales in the United States and Canada grew 4 percent, and the increase was 5 percent outside the U.S. and Canada.

Agriculture & Turf's sales increased 8 percent largely due to higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation. Meanwhile, construction & forestry division's sales fell 11 percent reflecting lower shipment volumes.

Looking ahead for fiscal 2013, Deere now projects attributable net income of about $3.45 billion, higher than the previous forecast of about $3.3 billion. For the year, equipment sales are projected to be up about 5 percent, despite an anticipated decline of nearly 5 percent for the fourth quarter.

Allen added, "Last year's fourth-quarter sales were particularly strong, in part because our factories were running at a high rate to catch up with customer orders. Even with this difficult comparison, our financial guidance implies a healthy level of income for the coming quarter and a third consecutive year of record results."

In pre-market activity, Deere shares gained $0.49 or 0.58 percent, and are currently at $84.40.