Deere Posts Upbeat Q3 Profit, But Lowers Sales Forecast

reported upbeat earnings for its fiscal third quarter, but the company issued a weak sales outlook. The Moline, Illinois-based company reported quarterly net income of $511.6 million, or $1.53 per share, compared to $850.7 million, or $2.33 per share, in the year-ago quarter. Its total sales slipped 20 percent to $7.59 billion, while net sales of the equipment operations declined to $6.84 billion from $8.72 billion. However, analysts were expecting a profit of $1.44 per share on sales of $7.17 billion. The average estimate among 35 Estimize users was for earnings of $1.50 per share and revenue of $7.17 billion. Equipment net sales in the United States and Canada slipped 21 percent in the third quarter, while equipment sales outside the U.S. and Canada declined 23 percent. Agriculture and turf sales dropped 24 percent for the quarter, while construction and forestry sales shrank 13 percent. Financial services posted net income of $153.4 million for the quarter, compared with $162.3 million in the year-ago quarter. "John Deere's third-quarter results reflected the continuing impact of the downturn in the farm economy as well as lower demand for construction equipment," said Samuel R. Allen, chairman and chief executive officer. "Nevertheless, all of Deere's businesses remained solidly profitable, benefiting from the sound execution of our business plans and the success of our efforts to develop a more agile cost structure." For the fourth quarter, the company expects equipment sales to decline around 24 percent. Deere now projects full-year net profit of around $1.8 billion, versus earlier forecast of $1.9 billion. The company now expects equipment sales to drop around 21 percent, versus prior outlook for a 19 percent decline. Deere shares slipped 1.45 percent to close at $90.65 yesterday.