Deere's Profit Jumps, but Misses Estimates
05/14/08 - 09:32 AM EDT
Robert Holmes
Shares of Deere (DE Quote - Cramer on DE - Stock Picks) tumbled Wednesday after the company warned that rising costs could dent its earnings over the next few quarters.
The Moline, Ill., farming-machinery manufacturer issued the weak outlook alongside its fiscal second-quarter earnings report. Deere said it earned $763.5 million, or $1.74 a share, in the quarter, rising from $623.6 million, or $1.36 a share, in the same quarter a year ago. Results fell a penny shy of the average analyst estimate, according to Thomson Reuters. On the positive side, Deere said revenue jumped to $8.1 billion from $6.9 billion in the year-ago quarter, well above Wall Street's forecast of $7.6 billion. Sales outside of the U.S. and Canada rose 46%, which the company said reflected the vigorous global farming sector. "All our businesses are benefiting from the consistent execution of our plans to create a fundamentally more resilient enterprise," said CEO Robert Lane in a release. "As a result, the company's nonagricultural operations have remained solidly profitable in spite of the economic downturn in the United States, while our performance overall continues on a record pace." Looking ahead, Deere said that equipment sales are projected to increase by about 20% for both the full year and the fiscal third quarter. Profits, however, might be light. Deere forecast net income of about $2.2 billion for 2008 and $550 million to $575 million for the fiscal third quarter. Analysts expect third-quarter net income of $650 million and a full-year profit of about $2.3 billion, according to Thomson Reuters.
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