Fourth quarter profits at Deere & Co. (NYSE: DE – $168.55) dropped 8% from a year ago and management issued a weak forecast for 2020 as U.S. trade disputes and bad weather squeezed it biggest customer, the American farmer. Deere now expects next year’s sales of agriculture and turf machinery to slide 5% – 10% compared with 2019, and sales of construction and forestry equipment to fall 10% – 15%. The outlook reflects slowing construction activity, which has been an area of strength for the Moline, Illinois company. For the quarter, profits were $722 million, better than Street expectations and adjusted revenue was $8.7 billion, also better that analysts’ views.
While shares of DE took a hit following the outlook, the long term fundamentals remain strong and consideration to hold positions in a conservative account is still prudent.