Deere's Profit Jumps, but Misses Estimates

The company also warns that rising costs could hurt its earnings over the next few quarters.
By Robert Holmes ,

Shares of

Deere

(DE) - Get Report

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.

"Escalating raw-material costs and the availability of various parts and components are expected to have an impact on operations for the balance of the year," the company said. Deere was lately down $5.35, or 5.9%, to $84.84.

Among related stocks,

Caterpillar

(CAT) - Get Report

was off nearly 2%, while

CNH Global

(CNH)

was flat.

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