By Michael Calia
Deere & Co. reported a 17% drop in sales and warned of
further difficulty as the farm-equipment maker continues to suffer
from weak demand.
Still, the company's results topped analysts' expectations.
"Deere's first-quarter performance reflected sluggish conditions
in the global farm sector, which reduced demand for agricultural
machinery, particularly larger models, and led to lower sales and
income," Chief Executive Samuel R. Allen said in a news
release.
The company, which cited the added pressure of foreign-exchange
effects, said it expects equipment sales to fall 17% during the
fiscal year, which ends in October, including a 19% decline in the
current period. The company previously expected a 15% drop for the
fiscal year.
Shares of Deere, up 7.7% over the past year through Thursday,
fell more than 1% in premarket trading.
Deere has scaled back on production and taken other measures to
contend with falling demand for its farm equipment as crop prices
declined and federal tax incentives for equipment purchases were
cut.
In January, the company said it planned to lay off 910 workers
in Iowa and Illinois as part of its drawdown in production. Those
layoffs came on the heels of more than 1,000 job cuts it announced
in August.
For the quarter ended Jan. 31, Deere said equipment sales fell
19%, with sales dropping 14% in the U.S. and Canada and 28% abroad.
The agriculture and turf segment's sales declined 27% to $4.08
billion; however, sales in the company's construction and forestry
segment rose 13% to $1.52 billion.
Overall, the company posted a profit of $386.8 million, or $1.12
a share, down from $681.1 million, or $1.81 a share, a year
earlier.
Total revenue, including the company's finance operations, fell
to $6.38 billion. Net sales excluding the financial division fell
19% to about $5.61 billion.
Analysts polled by Thomson Reuters had projected 83 cents a
share in earnings and $5.53 billion in revenue.
Write to Michael Calia at michael.calia@wsj.com
Access Investor Kit for Deere & Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US2441991054
Subscribe to WSJ: http://online.wsj.com?mod=djnwires