Deere’s unexpected rise in quarterly profits sends shares soaring

FILE PHOTO: The leaping deer trademark logo is seen on a sign outside a John Deere dealership in Taylor, Texas, U.S., February 16, 2017. REUTERS/Mohammad Khursheed/File Photo

CHICAGO (Reuters) – Deere & Co (DE.N) on Friday reported an unexpected increase in first-quarter profit and retained its full-year earnings forecast as signs of stabilization in the U.S. farm sector offset weak demand for construction machines, sending its shares soaring.

The farm equipment manufacturer reported net income of $517 million, or $1.63 per share, for the quarter ended Feb. 2, up from $498 million, or $1.54 per share, in the same period last year.

That compares with the average analyst estimate of $1.26 per share, according to Refinitiv Eikon data.

The Moline, Illinois-based company said it still expects net income in 2020 to be in the range of $2.7 billion to $3.1 billion.

The world’s largest farm equipment maker’s shares were last up 9% at $180.75 in pre-market trade.

Deere’s earnings in the past quarters were buffeted by a nearly two-year-long U.S.-China trade war that hit U.S. agricultural exports, leaving farmers struggling to turn a profit.

But President Donald Trump’s interim trade deal with China has raised hopes of a recovery in farm machinery demand.

“Farmer confidence, though still subdued, has improved due in part to hopes for a relaxation of trade tensions and higher agricultural exports,” Chief Executive John May said in a statement.

Improved pricing power along with lower production costs and warranty expenses in the latest quarter drove up operating profits at its farm and turf business, which accounts for nearly 60% of Deere’s revenue.

Reporting by Rajesh Kumar Singh; Editing by Jane Merriman and Steve Orlofsky

Source link

Share with your friends!

Products You May Like

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest news
straight to your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.