Deere Signals Better Performance Ahead
November 23 2016 - 08:10AM
Dow Jones News
Deere & Co. signaled that the long slide in equipment demand
could ease in 2017 as it said revenue would continue to fall but by
less than Wall Street expected.
Shares rose 6.5% to $98 in premarket trading.
For its year ending in October 2017, Deere expects sales to slip
about 1%, compared with the 9.3% drop it posted for the year that
ended last month. Analysts, polled by Thomson Reuters, were
anticipating revenue of $22.71 billion this year, which would be a
2.9% decline from $23.39 billion the prior year.
"Our forecast continues to represent a standard of performance
that is considerably higher than in earlier downturns," Chairman
and Chief Executive Samuel R. Allen said in prepared remarks.
Deere's sales have been hurt by the industrywide slide in farm
equipment as lower crop prices and a saturated market for used
equipment pin down demand for machines. Those factors continued to
weigh on Deere in the October quarter, though the sales decline was
better than analysts had feared.
Deere in August said it plans to trim $500 million in costs by
2018. Overall costs and expenses fell 2.7% in the latest
quarter.
In all for the quarter, Deere reported net income of $285.3
million, or 90 cents a share, compared with $351.2 million, or
$1.08 cents a share, in the year-ago period.
Sales fell 5% to $5.65 billion, better than the $5.38 billion
expected by analysts.
Despite the dismal market for farm machinery over the past
couple of years, Deere has continued to deliver for investors by
frequently managing to top downbeat profit expectations with cost
reductions. Deere's stock is up 21% since the start of 2016,
compared with an 8% gain for the broader S&P 500 index.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
November 23, 2016 07:55 ET (12:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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