Deere's Stock Surges After Big Profit And Sales Beats, Raised Outlook

Jay Anderson
May 20, 2017

Deere's quarterly sales of farm and construction equipment rose for the first time in more than three years, and the company's rising profit and sales beat forecasts.

Worldwide net sales and revenues saw an increase of five percent.

Net income attributable to Deere rose 62 percent to $802.4 million, or $2.49 per share, in the second quarter ended April 30, helped by higher shipments, improved pricing and cost cuts.

"We are seeing modestly higher overall demand for our products, with farm machinery sales in South America experiencing a strong recovery", CEO Samuel Allen said in a statement.

But the firm forecast an 9% rise in sales for the financial year, powered in part by a 20% rise in sales of farm machinery in South America.

For the year, the company now expects revenue to grow about 9%, up from 4% expected previously, and net income of about $2 billion, up from the $1.5 billion expected before.

Construction & Forestry: Construction and forestry sales increased 7 percent for the quarter and 1 percent for six months.

Deere's equipment operations reported operating profit of $1.111 billion for the quarter and $1.358 billion for six months, compared with $688 million and $902 million, respectively, last year.

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Deere said the gain on the sale of a partial interest in SiteOne made a significant contribution to the division's results for both periods.

In last quarter's release, Allen noted that the worst of that recession may be over.

Shares of Deere traded up 5.5% at $118.81 in the premarket Friday morning, a new 52-week high if it holds after the bell.

Deere's worldwide sales of agriculture and turf equipment are forecast to increase by about 8 percent for fiscal-year 2017.

The strong results are further evidence Deere is seeing further stabilization in the industry. "This resilience illustrates our success driving improved operating efficiencies and developing a wider range of revenue sources". The company had revenue of $7.1 billion in the same period past year.

Deere's sales had taken a hit as bumper corn and soybeans harvests drove down prices, leaving farmers with less cash to spend on equipment.

Analysts have forecast fiscal year sales of $24.32 billion, about 5% higher than sales of $23.39 billion in 2016.

Other reports by BadHub

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