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John Deere says farming is still in trouble
( REUTERS/Brent Smith)
John Deere says the agricultural industry will be in the pit for a while.
The maker of huge machinery used in farming and construction reported third-quarter earnings results on Friday morning.
It beat earnings forecasts, but expects that the rest of the year will be painful for the agricultural industry, of which it has a solid reading.
For the quarter, it reported adjusted earnings of $512 million, or $1.53 per share — down 40% year-over-year. Revenues fell 20% from a year ago to $7.6 billion.
The consensus estimate among analysts was for adjusted earnings per share of $1.44 on revenues of $7.17 billion, according to Bloomberg.
Deere and other agricultural companies have had to grapple with grain prices that tumbled as a result of bountiful harvests. Last week, corn, wheat, and soybean futures fell sharply after the US Department of Agriculture raised its forecasts for production this year.
During the quarter, Deere equipment net sales in the US and Canada fell 21%, and dropped 23% elsewhere.
And for the rest of the fiscal year, the company estimates that equipment sales will drop about 21%, including a 4% currency hit.
"John Deere's third-quarter results reflected the continuing impact of the downturn in the farm economy as well as lower demand for construction equipment," said CEO Samuel Allen in the earnings statement.
"Lower commodity prices and falling farm incomes are continuing to pressure demand for agricultural machinery, with the declines most pronounced in higher-horsepower models," the statement said.
In the second quarter, the company's profits fell 30% year-on-year, and the top and bottom lines surpassed analysts' forecasts.
The stock is down 5% for the year, and 2.5% over the past 12 months. The stock fell more than 5% in early trading on Friday.
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