New York: Deere & Company cut its profit outlook again and reported a decline in quarterly earnings yesterday as a global farm recession and weak construction equipment markets led to lower sales of the company’s machinery.
Deere reduced its fiscal-year net income forecast to $1.2 billion from $1.3bn.
Last year, the company had forecast net income of $1.4bn for this fiscal year.
JP Morgan analyst Ann Duignan said Deere, along with other agriculture, construction and mining equipment companies such as Caterpillar, AGCO Corporation, Joy Global and CNH Industrial, could face higher costs on increased cold rolled steel prices, which are up 64 per cent year-to-date.
“Given these industries are already under significant pressure, ... the opportunity to offset higher costs with price increases is likely very limited,” Duignan wrote in a research note.
Deere also forecast a fiscal-year sales decline of nine pc, less steep than the 10pc it had previously expected.
Net income attributable to Deere fell to $495.4 million, or $1.56 per share, in the second quarter from $690.5m, or $2.03 per share, a year earlier.
Analysts on average had expected $461.46m.
Net revenue decreased by four pc to $7.88bn while analysts had expected $6.72bn.
In the agriculture and turf segment, the larger of Deere’s two
equipment businesses, sales were flat at $5.7bn. Global sales in the construction and forestry segment fell 16pc to about $1.4bn.
Equipment sales fell six pc in the US and Canada and decreased 1 percent internationally.