MOLINE, Ill. - Deere's (DE) fiscal first-quarter performance beat Wall Street's expectations, even as the company continues to deal with weak sales of farm and construction equipment. The agricultural equipment maker lowered its full-year forecast.
Deere has been contending with slumping agricultural machinery sales for some time. Falling commodity prices have made farmers less likely to buy new equipment. Declining oil prices have also affected its construction equipment sales. In November the company announced that it was laying off about 220 workers.
But Deere has been effectively managing its costs. In the first quarter, total costs and expenses declined to $5.17 billion from $5.82 billion.
For the period ended Jan. 31, Deere earned $254.4 million, or 80 cents per share. That compares with $386.8 million, or $1.12 per share, a year earlier.
This beat the 71 cents per share that analysts surveyed by Zacks Investment Research expected.
Revenue for the Moline, Illinois-based company totaled $5.53 billion, topping the $4.79 billion that Wall Street forecast.
Sales for the agriculture and turf unit dropped 12 percent in the quarter. Construction and forestry division sales fell 23 percent.
For fiscal 2016, Deere now anticipates equipment sales declining about 10 percent and earnings of approximately $1.3 billion. Its prior guidance was for equipment sales to fall 7 percent and earnings to come in at about $1.4 billion.
The company predicts equipment sales will drop approximately 8 percent in the second quarter.
The initial reaction on Wall Street was negative. Deere shares fell $2.54, or 3.1 percent, to $77.79 in premarket trading Friday morning.