Deere posts strong profit, but farmbelt spending a concern
By James B. Kelleher
CHICAGO (Reuters) - Deere & Co (DE.N: Quote) reported a much higher-than-expected quarterly profit on Wednesday on strong sales of its tractors and harvesters in the Americas, but some analysts said the results represented the high-water mark for the company in the current farm cycle.
Deere also said sales for the current quarter would be 5 percent lower than a year earlier. Its shares fell more than 1 percent.
Earlier this year, Deere lowered its outlook for fiscal 2013 revenue, saying a cooler-than-normal spring in North America had depressed sales. Some investors worried the softness was a sign of a new normal as corn prices have retreated from the all-time highs they hit last summer.
A number of analysts, including UBS, Barclays and William Blair & Co, have cut their outlooks and share-price targets for Deere in recent days, citing concerns that farmers will slash their capital spending because of plunging grain prices.
William Blair analyst William De Maria said the results for the third quarter ended July 31, while impressive, suggested "the peak may have just occurred."
Indeed, De Maria said that while the company raised its forecast for full-year earnings per share, the outlook implied a lower fourth quarter than many analysts were modeling going into Wednesday's announcement.
Deere, the world's largest maker of agricultural equipment, said earnings rose to $996.5 million, or $2.56 a share, in the quarter from $788 million, or $1.98 a share, a year earlier.
Analysts on average expected the Moline, Illinois-based company to report a profit of $2.17 a share, according to Thomson Reuters I/B/E/S. Continued...