DE Deere and Co

By Bob Tita 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 17, 2018).

Deere & Co. raised sales forecasts for its farm and construction equipment this year, even as supply and delivery bottlenecks crimped quarterly sales.

The machinery maker on Friday reported a fiscal first-quarter loss on charges tied to the new federal tax code and lower-than-expected equipment sales.

But Deere said prospects are good for its farm and construction machinery.

"Deere has continued to experience strong increases in demand for its products as conditions in key markets show further improvement," Chief Executive Sam Allen said.

Deere's stock rose 1.6% to $169.44.

Despite another bumper harvest last year that weighed on crop prices and farmers' incomes, a pick up in sales of high-horsepower equipment shows that some farmers are buying again.

The company on Friday said it has encountered difficulties accelerating production from the low volumes of recent years.

"We are working with our suppliers and logistics providers as they adjust to the present conditions," said Chief Financial Officer Rajesh Kalathur. "It takes time for them to actually put the people in place and get them trained and have them working."

Sales of Deere's green-and-yellow farm and landscaping machinery rose 18% to $4.2 billion in quarter that ended Jan. 28, while profit from the business soared 78% to $387 million.

Deere expects its world-wide farm equipment sales to increase 15% this year, up from a 9% increase anticipated in November.

The Moline, Ill.-based company expects overall sales of farm and construction equipment will rise 29% in the fiscal year ending in October, up from a 22% forecast giving late last year.

The sales growth is being aided by the addition of German road-paving-equipment manufacturer Wirtgen Group, which Deere bought last year for $5 billion.

The Wirtgen acquisition is expected to add 56% to sales in Deere's construction unit this year, expanding the unit's reach beyond North America and helping offset sales in the cyclical farming business.

Deere's construction-machinery business continued to benefit from resurgent demand in North America.

Deere booked $965 million in charges related to the new federal tax legislation. The charges stem from the write-down of the value of Deere's net deferred tax assets and the repatriation of previously untaxed earnings held overseas.

Overall for its first quarter, Deere reported a loss of $535.1 million, or $1.66 a share, compared with $193.8 million profit, or 61 cents a share, a year earlier.

Excluding the tax charges, the company earned $1.31 a share. Analysts expected $1.20 a share.

Quarterly equipment sales rose 27% to $6 billion, though analysts' were expecting $6.42 billion.

Corrections & Amplifications An earlier version of this article incorrectly stated the charges related to the new federal tax legislation. Deere's charges totaled $965 million for the reduced value of net deferred tax assets and the repatriation of previously untaxed earnings held outside of the U.S. (Feb. 19, 2018)

Austen Hufford contributed to this article

Write to Bob Tita at robert.tita@wsj.com

(END) Dow Jones Newswires

February 20, 2018 15:40 ET (20:40 GMT)

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