Deere Posts Lower Quarterly Results, But Above Estimates; Cuts Profit Outlook
Agriculture and construction machinery manufacturer Deere & Company (NYSE: DE – $77.55), reported fiscal second quarter earnings and revenues above Street views, although off from the prior year. The company also projected full fiscal year earnings of $1.2 billion, on a 9% sales decline. Deere reported earnings per share of $1.56, above the $1.48 Street estimate, though down from $2.03 a year earlier. Deere reported revenues of $7.11 billion, above the consensus estimates of $6.66 billion. A year earlier, the company reported revenue of $7.40 billion.
Management said that company equipment sales are projected to decrease about 9% for fiscal 2016 ending in October and to be about 12% lower for the third quarter compared with year-ago periods. Included in the forecast is a negative foreign-currency translation effect of about 2% for the full year and 1% in the third period. For the full fiscal year, net income is anticipated to be about $1.2 billion or $3.80 per share. Although the forecast calls for lower results this year in light of ongoing market pressures, management went on to say it is continuing to perform at a much higher level than in previous downturns. The company is continuing to streamline operations in light of the bleak outlook for agriculture and heavy construction. The high-quality shares, down nearly 6% on the news, can be held for a decent dividend and eventual price recovery.