Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Deere Shares Punished on Earnings Miss


The company had also lowered full-year guidance earlier today.


Deere & Company (DE), the world's largest farm equipment maker, announced lower-than-expected quarterly profits Wednesday. The company also lowered full-year guidance. Deere shares dropped in early-market trading, down more than seven percent.

Deere projected net income of $3.1 billion for the year compared to the $3.3 billion analysts were anticipating, according to Thomson Reuters I/B/E/S estimates

Despite an 11% increase in net income to $788 million or $1.98 per share for the third quarter, the figures failed to impress analysts that were looking for $2.32 per share. For the same period last year, Deere posted net income of $712.2 million or $1.69 per share.

Deere attributed the lower guidance to the drought in the US and parts of Asia and South America. "Global economic conditions and dryness in several key markets warrant some caution in coming months," said CEO Samuel R. Allen in a statement.

A study released by Langenberg & Company earlier in the week said farmers' income could fall more than 10% during the remainder of the year. For Deere, that may affect agricultural equipment sales. The report also acknowledged, though, that for farmers with large properties who are insured, tractors sales would be unaffected.

Deere also blamed an 11% currency impact due to the strength in the dollar worldwide this year. The company forecasted international sales for the entire industry to drop 5% to 10% for the full year.

Moreover, Deere reported a 15% revenue increase for the year ended July 31. However, without Canadian sales, revenue was only up 7% for the year and was unchanged for the third quarter. "Sales fell short of our expectations due to weakening in certain international markets and short-term manufacturing inefficiencies resulting from the introduction of a record number of new products," Allen said in the statement.

Deere also blamed "unfavorable currency-transition" on the weaker numbers. But South American sales may also be to blame -- especially due to Argentina's drought. Also, there are visible signs of softening sales in both China and India.

Deere's competitor Caterpillar (CAT) was trading down around 0.6% for the day. Agricultural manufacturer AGCO's (AGCO) shares were getting hit, down over 3% in early trading.

Deere shares may continue to fluctuate in a wide and directionless pattern for the foreseeable future. A plethora of uncertain variables have kept investors from committing long term to the farm equipment sector, specifically Deere.

Editor's Note: This content was originally published on by Chris Poley.

Below, find some more great ETF and market content from Benzinga:

General Motors Starts Negotiations with Canadian Auto Workers

Buffett Drops Intel

Invest Like Boone Pickens With These ETFs

Twitter: @Benzinga

Benzinga Pro covers this and all market news in real time. Get your free trial here.

< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos