Bloomberg

Deere & Co. (DE) posted weaker-than-expected first quarter earnings Friday, citing"unsettled" conditions in key markets, but noted that easing cost pressures would allow it to be "cautiously optimistic" on profits for the 2019 year.

Deere said earnings for the three months ending in January, the company's fiscal first quarter, came in at $1.54 per share, up 17.55% from the same period last year but well shy of the Street consensus of $1.77 per share. Group sales, Deere said, rose 16% to $6.94 billion and topped analysts' forecasts of $6.85 billion. Agricultural sales, its biggest business division, rose 10% to $4.681 billion while forestry and construction sales surged 31% to $2.26 billion.

Looking into 2019, Deere said its sees group sales rising 7%, with equipment sales rising by a similar percentage, taking net income to around $3.6 billion. Both figures match the company's guidance from late November. 

"Although Deere has continued to make solid progress on a number of fronts and reported higher earnings for the quarter, our results were hurt by higher costs for raw materials and logistics as well by customer concerns over tariffs and trade policies," said CEO Sam Allen. "These latter issues have weighed on market sentiment and caused farmers to become more cautious about making major purchases."

"We believe cost pressures should abate as the year progresses and are hopeful we will soon have more clarity around trade issues", he added. "As a result, we remain cautiously optimistic about our prospects for the year ahead."

Deere shares were marked 0.12% lower in pre-market trading following the earnings release, indicating an opening bell price of $162.40 each, a move that would trim the stock's three month gain to around 10.3% and value the Moline, Illinois-based industrial group at just over $51 billion.

Earlier this month, Caterpillar Inc. (CAT) shares suffered their biggest single-day decline in nearly a decade after it posted weaker-than-expected fourth quarter earnings and forecast a "modest" in increase in 2019 sales it linked to weakening demand in China.

Adjusted earnings for the three months ened in December came in at $2.55 per share, Caterpillar said, up 16% from the same period last year but well shy of he Street consensus of $2.98. Group revenues, Caterpillar said, rose 11% to $14.34 billion and were largely in-line with the consensus forecast. Caterpillar said it expects 2019 profit to increase to a range of $11.75 to $12.75 per share, compared to the Refinitiv consensus forecast of $12.73 per share.

"In 2018, Caterpillar achieved record profit per share and returned significant levels of capital to shareholders," said CEO Jim Umpleby. "Our global team remained focused on serving our customers, executing our strategy and investing for future profitable growth."

"Our outlook assumes a modest sales increase based on the fundamentals of our diverse end markets as well as the macroeconomic and geopolitical environment. We will continue to focus on operational excellence, including cost discipline, while investing in expanded offerings and services to drive long-term profitable growth," he added.

Caterpillar also said its order backlog fell $800 million over the final three months of the year to $16.5 billion, although energy and transportation sales rose 11.5% to $6.287 billion. Resource industry sales, Caterpillar said, rose 489 million to $2.979 billion.

The U.S. dollar index, which benchmarks the greenback against a basket of six major global currencies, rose 1.1% over the three months ending in December, but ended the year 3.8% higher than the fourth quarter of 2017.