Deere & Co., the world’s biggest farm equipment manufacturer, lowered its fiscal full-year profit outlook on projections for reduced sales of tractors and combines as farmers face a decline in income.
HAMPSHIRE, IL - AUGUST 19: Frank Sieroslawski details a customer's John Deere tractor at the Buck Bros. dealership August 19, 2009 in Hampshire, Illinois. Deere & Co., the world's largest maker of farm equipment, today posted a decline of approximately 27 percent in third-quarter profit. (Photo by Scott Olson/Getty Images)
Full-year net income will be about $1.2 billion, Moline, Illinois-based Deere said in a statement Friday, compared with the $1.3 billion it forecast in February. Equipment sales are now projected to decline about 9 percent, while in February it had forecast a 10 percent drop.
Deere is battling a glut of farm-equipment inventories stocked up at dealerships by eliminating jobs and cutting production. A recent rebound for corn and soybean prices may give farmers enough confidence to start buying machinery again as this year’s U.S. growing season gets under way.
“With agricultural commodity pricing at these levels, I could see that giving them some light,” Kwame Webb, analyst at Morningstar Inc., in Chicago, said by phone Thursday. “Most of the ag commodities have taken a step up. Everyone wants to know what that means for order boards in North America.”’
Soybean futures traded in Chicago entered a bull market last month as heavy rains flooded fields in Argentina, among the world’s top exporters.
The last time Deere boosted its full-year forecast was a year ago. The company’s shares have increased 2 percent since the U.S. government estimated lower-than-expected soybean supplies, because of heavy rain in South America.