Agriculture and turf equipment maker Deere (DE) - Get Report on Friday posted fiscal first-quarter earnings that handily beat analysts’ forecasts and reiterated its fiscal 2020 profit guidance amid signs of sunny skies ahead for the U.S. farming sector.
The Moline, Ill-based company said it earned $517 million, or $1.63 a share, in its fiscal first quarter ended Feb. 2, up from $498 million, or $1.54 a share, in the comparable year-earlier period. Analysts polled by FactSet had been expecting earnings of $1.29 a share.
Sales rang in at $7.63 billion, down from $7.98 billion a year ago though ahead of analysts’ forecasts of $6.22 billion.
Stabilization in the farming sector thanks to lower trade tensions in the wake of the U.S.-China phase one trade deal and expectations for stronger farm exports was partly offset by weakness in construction and forestry machinery sales, CEO John May said in a statement.
“John Deere’s first-quarter performance reflected early signs of stabilization in the U.S. farm sector,” May said. “Farmer confidence, though still subdued, has improved due in part to hopes for a relaxation of trade tensions and higher agricultural exports.
“At the same time, activity in the construction sector has slowed leading to lower sales and profit for our construction and forestry division. Also impacting results in Deere’s construction equipment business were our actions to reduce factory production and lower inventories in response to current market conditions.”
Still, budding signs of stabilization in the farming sector prompted Deere to reiterate its full-year earnings guidance of between $2.7 billion and $3.1 billion, though it cautioned that sales of agriculture and turf equipment will likely drop 5% to 10%, while construction and forestry sales will see a decline of between 10% and 15%.
Shares of Deere gained 7.6% to $178.47 in morning trading on Friday.