Deere's profit tops forecasts even as its sales fall sharply
MOLINE, Ill. (AP) — Even though sales of its green tractors, bulldozers and other equipment fell sharply, Deere & Co. reported better-than-expected fourth-quarter earnings as it cut costs.
The Moline, Illinois-based company also posted an earnings outlook for the year that surpassed Wall Street expectations. Its shares rose more than 2 percent in morning trading.
Deere has been hurt by weak commodity prices which have made farmers less likely to buy new equipment. And falling oil prices has hurt sales of its construction equipment.
Sales of its agriculture equipment, which include tractors, fell 25 percent in the quarter from a year ago. Sales of its construction equipment fell 32 percent in the period from a year ago.
For the fiscal year 2016, the company expects earnings of about $1.4 billion, above the $1.33 billion analysts expected, according to FactSet. Deere said it expects sales of its equipment to fall 7 percent in fiscal 2016, compared with the year before.
For the quarter ending Oct. 31, it reported fiscal fourth-quarter net income of $351.2 million, or $1.08 per share.
The results surpassed Wall Street expectations. The average estimate of 10 analysts surveyed by Zacks Investment Research was for earnings of 74 cents per share.
Deere said it cut costs by 21 percent to $6.26 billion.
The agricultural equipment manufacturer posted revenue of $5.93 billion in the period, which fell short of Street forecasts. Five analysts surveyed by Zacks expected $6.13 billion.
For the year, the company reported profit of $1.94 billion, or $5.77 per share. Revenue was reported as $25.78 billion.
Shares of Deere rose $1.59, or 2.1 percent, to $77.93 in morning trading Wednesday. Deere shares have dropped about 14 percent since the beginning of the year.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on DE at http://www.zacks.com/ap/DE
Keywords: Deere, Earnings Report