Deere Reports Less-Severe Sales Decline, Tops Expectations
May 20 2016 - 8:20AM
Dow Jones News
Deere & Co. said its second-quarter sales decline wasn't as
steep as feared, resulting in earnings that topped expectations and
a revenue forecast for the year that is slightly less dismal.
The world's largest seller of farm tractors and harvesting
combines has been struggling through a prolonged slump in U.S. farm
machinery demand that has been partly due to the effect of lower
prices for commodities like corn and soybeans on farmers' incomes.
At the same time, the strong U.S. dollar has made its machinery
more expensive abroad, and cutbacks in investment spending by
energy-related companies have hurt Deere's business.
In February, the company warned that its equipment sales decline
this year would accelerate, forecasting a 10% decline after having
previously expected a 7% decrease. But on Friday, Deere signaled
that the worst of its downturn might be nearing its end, nudging up
its 2016 equipment sales forecast for 2016 to predict a 9%
fall.
"Although our forecast calls for lower results this year in
light of ongoing market pressures, Deere is continuing to perform
at a much higher level than in previous downturns," Chief Executive
Samuel Allen said.
For the second-quarter, Deere said total sales fell 3.6% to
$7.88 billion. That decline was much less steep than the 18% drop
analysts predicted. Sales of agricultural and turf equipment
slipped 0.4% to $5.74 billion.
In all, Deere reported a profit of $495.4 million, or $1.56 a
share, down from $690.5 million, or $2.03 a share, a year earlier.
Analysts expected $1.47 in per-share profit, according to Thomson
Reuters.
Mr. Allen highlighted Deere's efforts to contain costs in the
face of lower sales. The company brought overhead expenses down by
3.4% during the period.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
May 20, 2016 08:05 ET (12:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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