Deere Q3 Profit Drops Amid Lower Demand

(RTTNews) - Agricultural machinery maker Deere & Co. (DE) Friday said its third-quarter profit declined from the previous year, as sales dropped 20 percent hurt by lower demand for construction equipment. Further, the company lowered its full-year forecast.

Samuel Allen, chairman and CEO, said, "John Deere's third-quarter results reflected the continuing impact of the downturn in the farm economy as well as lower demand for construction equipment. Nevertheless, all of Deere's businesses remained solidly profitable, benefiting from the sound execution of our business plans and the success of our efforts to develop a more agile cost structure."

Net income attributable to the company fell to $511.6 million or $1.53 per share from $850.7 million or $2.33 per share for the same period last year. On average, 20 analysts polled by Thomson Reuters expected earnings of $1.44 per share for the quarter. Analysts' estimates typically exclude special items.

Worldwide net sales and revenues decreased 20 percent to $7.594 billion from $9.50 billion in the previous year. Net sales of the worldwide equipment operations declined 22 percent from last year to $6.84 billion from $8.72 billion. Analysts expected revenues of $7.17 billion.

Within the Equipment Division, Agriculture & Turf sales fell 24 percent to $5.31 billion due largely to lower shipment volumes and unfavorable currency effects.

Deere noted that lower commodity prices and falling farm incomes are continuing to pressure demand for agricultural machinery. The declines are most pronounced in higher-horsepower models.

Construction and forestry sales decreased 13 percent for the quarter to $1.53 billion, due partly to lower shipment volumes.

Looking ahead, for fiscal 2015, net income attributable to Deere & Company is anticipated to be about $1.8 billion.

Company equipment sales are projected to decrease about 21 percent for fiscal 2015 and to be down about 24 percent for the fourth quarter.

In May, the company projected attributable full-year net income of about $1.9 billion, and equipment sales were expected to decrease about 19 percent.

DE closed down 1.5 percent on Thursday at $90.65.