The biggest agricultural-equipment manufacturer in the world – Deere & Co. cut its profit forecast for the fiscal year. The company also said it has decided to reduce production because record crops weigh both on grain prices and U.S. farmers spending.
Mr. Samuel R. Allen, the Chairman and Chief Executive Officer of the company, said in the statement, which was cited by Bloomberg: “For the balance of the year, the company will be scaling back production in line with demand for our agricultural products.”
Deere & Co. said in its statement that it expects a net income of about $3.1 billion in the year that ends October 31st. This forecast is lower than the one made by the company in May, when Deere projected a net income of about $3.3 billion. The U.S.-based company also shared that its equipment sales will decline by 6% in comparison to its previous forecast of a 4% fall. An 8% decrease in the equipment sales over the current quarter is expected.
The company also shared its results for the third quarter. According to Deere & Co., the 15% decline in its profit over the third fiscal quarter was due to stagnation of the farm economy and the lower equipment sales tied to reduced farmers spending. Deere reported that its net income fell from 997 million dollars, or $2.56 per share, to 851 million dollars, or $2.33 per share over the third quarter. The result, however, surpassed the median analysts expectations of $2.20 per share.
The company said that its equipment sales declined from $9.32 billion over the same period a year ago to $8.72 billion. The result matched the analysts projections.
Mr. Samuel Allen, who is the Chairman and Chief Executive Officer of the company said in the statement, which was cited by the Wall Street Journal: “Deeres third-quarter performance reflected moderating conditions in the global farm sector, which have negatively affected demand for farm machinery and contributed to lower sales and profits for our agricultural-equipment business. At the same time, our construction and forestry and financial-services divisions had higher profit, showing the benefit of a broad-based business lineup.” Mr. Allen also shared that the companys plans to expand its market presence worldwide are still on the agenda.
Deere & Co. was 1.33% down to trade at $85.33 per share by 15:36 BST (14:36 GMT). The companys shares have gained 1.69% in the past year, valuing the company at $31.46 billion. According to the information published on CNN Money, the 21 analysts offering 12-month price forecasts for Deere & Co. have a median target of 88.00, with a high estimate of 110.00 and a low estimate of 75.00. The median estimate represents a +1.76% increase from the last price of 86.48.
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