Deere Earnings Fall 45%, Forecast Trimmed

Deere said first-quarter net income fell 45% to $203.9 million, or 48 cents a share, as higher material costs, the global recession and volatile foreign exchange rates pressured earnings.
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Deere & Co.

(DE) - Get Report

said Wednesday first-quarter net income fell 45% to $203.9 million, or 48 cents a share, from $369.1 million, or 83 cents a share, as higher material costs, the global recession and volatile foreign exchange rates pressured earnings.

Net sales and revenue worldwide fell 1% to $5.15, down slightly from sales and revenue of $5.20 billion a year earlier.

Analysts surveyed by Thomson Reuters expected first-quarter earnings of 63 cents a share on revenue of $4.64 billion.

Net sales at Deere's equipment operations were $4.56 billion for the first quarter, up 1% from $4.53 billion last year. Included were price changes of 6%, offset by an unfavorable currency-translation effect of 6%.

The agricultural-equipment maker said equipment net sales in the United States and Canada increased 1% in the first quarter. Net sales outside the United States and Canada were unchanged for the quarter, including an unfavorable currency-translation effect of 14%.

Deere said its equipment operations reported operating profit of $307 million for the quarter compared with $457 million last year. The deterioration was due largely to increased raw material costs and unfavorable effects of volatile foreign-currency exchange, partially offset by improved price realization, the company said.

Deere said the outlook for the coming year remains "unusually uncertain, especially with respect to foreign exchange, and the outlook's impact on the company's sales and earnings difficult to assess."

Equipment sales are projected to be down about 8% for the full year and down about 9% in the second quarter. Included is a negative currency-translation impact of about 6% for both the year and second quarter.

Deere said 2009 net income is expected to be about $1.5 billion, "with more risk on the downside at this time."

Deere also said it will suspend providing quarterly net income forecasts because of uncertainties in the global economy.