MOLINE, Ill. - Deere (DE) topped profit expectations and raised its earnings outlook for the year as the farm equipment maker cuts its own costs with farmers under pressure.
The U.S. earlier this month raised its expectations for corn and soybeans harvests to record highs, meaning profits for farmers will be more meager.
While Deere’s profit and revenue fell during the quarter, the Moline, Illinois, company has scaled back in recent years to offset declines, and investors pushed shares up 3 percent before the opening bell.
For the three months ended July 31, Deere earned $488.8 million, or $1.55 per share. A year earlier the company earned $511.6 million, or $1.53 per share.
This easily topped the 95 cents per share that analysts surveyed by Zacks Investment Research called for.
Total costs and expenses dropped to $6.02 billion from $6.86 billion.
Sales fell to $5.86 billion from $6.84 billion on weaker performances in its agriculture and turf and construction and forestry divisions.
Chairman and CEO Samuel Allen said the company’s results “reflected the continuing impact of the global farm recession as well as difficult conditions in construction equipment markets.”
The U.S. Department of Agriculture expects farmers to harvest 15.2 billion bushels of corn -- a billion more than 2014’s record 14.2 billion. A record soybean crop of 4.06 billion bushels also is expected, beating 3.9 billion bushels last year.
That’s a lot of work for farmers, but the yield on each bushel will fall in most cases, and that will likely prompt those farmers to put off purchases of more equipment.
Deere & Co. said that it now foresees fiscal 2016 earnings to be about $1.35 billion. Its prior guidance was for earnings of about $1.2 billion. Analysts polled by FactSet predict $1.23 billion.
In the weeks following the USDA forecast, Deere shares have fallen around 7 percent and they are now barely positive for the year.