Deere & Co. announced that it expects a fiscal 2014 profit that beats analysts estimates as the company forecast higher construction and forestry equipment sales, which were also said to help it compensate for some part its revenue decline in agriculture, currently its largest market.
Deere & Co. made an official statement today, saying its net income will decrease from 3.54 billion dollars a year earlier to 3.3 billion dollars in the year through October. This forecast tallies the one from November 2013, but it exceeds the 3.13-billion-dollar average of some analysts according to data compiled by Bloomberg. Still, the company kept its forecast for a 3% drop for its equipment sales.
The companys net income was reported to be 1.81 dollars a share in the three months through January the 31st in comparison to 1.65 dollars a share for the same period a year earlier. Deere & Co.s equipment sales increased by 2.2% and reached 6.95 billion dollars during the same period, which also beat the 6.55-billion-dollar average analysts estimates.
Currently, Deere & Co. is the largest maker of agricultural machinery in the world. The company posted earnings for the fiscal first quarter and a revenue that surpassed analysts estimates. Its shares increased by 2.3% and reached 89.50 dollars before the start of regular trading in New York. After the financial crisis more than four years ago, the building activity in the U.S. is considered to be recovering. At the same time, sales to U.S. farmers are forecast to decrease because their earnings decline along with the prices of corn.
The company revealed today that its construction and forestry segment sales will jump about 10% during the current financial year. It also projected that its agriculture and turf business global sales would decrease by about 6%.
One of the analysts working for Jefferies & Co. – Stephen Volkmann said in an interview for Bloomberg today: “Construction equipment will help them. While the stock may open higher today, the strength may fade on the prospect of lower sales of agricultural equipment.”
Deere & Co.s shares fell by 0.91% to $86.66 by 15:10 GMT in New Yrok, marking a one-year change of -7.67%. According to Financial Times, the 18 analysts offering 12-month price targets for Deere & Co. have a median target of $87.00, with a high estimate of $102.00 and a low estimate of $72.00. The median estimate represents a -0.53% decrease from the last price of 87.46.
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