Deere Q2 Results Down, Yet Top View; Cuts FY16 Profit Forecast

(RTTNews) - Agricultural machinery maker Deere & Co. (DE) reported Friday lower profit in its second quarter, reflecting weak equipment sales. Profit and net sales, however, topped analysts' estimates. Further, the company cut its forecast for fiscal 2016 profit, while updated sales view.

For the second quarter, attributable net income was $495.4 million or $1.56 per share, lower than last year's $690.5 million or $2.03 per share last year. On average, 19 analysts polled by Thomson Reuters expected earnings of $1.48 per share for the quarter. Analysts' estimates typically exclude special items.

Deere's equipment operations reported operating profit of $688 million, compared with $828 million last year, primarily due to lower shipment volumes, the unfavorable effects of foreign-currency exchange and the impact of a less favorable product mix.

Worldwide net sales and revenues decreased 4 percent to $7.88 billion from last year's $8.17 billion. Net sales of the equipment operations were $7.11 billion, down 4 percent from $7.40 billion a year ago. Analysts were looking for sales of $6.71 billion.

The company attributed the decline in sales to global farm recession, and weak construction-equipment markets.

Sales included price realization of 1 percent and an unfavorable currency-translation effect of 2 percent for the quarter.

Equipment net sales decreased 6 percent in the United States and Canada, and 1 percent outside the U.S. and Canada.

Agriculture & Turf sales were approximately the same for the quarter, while construction and forestry sales decreased 16 percent mainly as a result of lower shipment volumes and higher sales-incentive costs.

Looking ahead, for fiscal 2016, the company projects attributable net income of $1.2 billion. The company previously said it expect fiscal 2016 attributable net income to be about $1.3 billion.

Company equipment sales are now projected to decrease about 9 percent for fiscal 2016 and to be about 12 percent lower for the third quarter compared with year-ago periods. Previously, company equipment sales were projected to decrease about 10 percent for fiscal 2016.

Deere shares closed Thursday's trading at $82.25, down 0.42 percent.