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Deere Leaps Targets

Earnings beat estimates by 31 cents.
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Deere (DE) - Get Deere & Company Report galloped past second-quarter earnings targets and projected solid sales growth for the rest of the year.

The Moline, Ill., tractor company made $624 million, or $2.72 a share, for the quarter ended April 30, up from the year-ago continuing operations profit of $517 million, or $2.17 a share. Sales rose 5% from a year ago to $6.88 billion.

Analysts surveyed by Thomson Financial were looking for a profit of $2.41 a share on sales of $6.46 billion.

"Advanced product offerings that help John Deere customers be more profitable and productive are supporting our positive financial performance and expanded global market presence," CEO Robert Lane said. "At the same time, we are making further progress holding the line on asset levels while effectively serving the needs of customers throughout the world."

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Net sales of the worldwide equipment operations increased 4% for both the quarter and six months. This included positive effects for currency translation and price changes of 4% for both the quarter and six months. Equipment net sales in the U.S. and Canada were down 3% for the quarter and down 4% for the year to date. Net sales outside the U.S. and Canada increased by 22% for the quarter and 23% for six months, including a positive currency-translation effect of 7% for both periods.

Company equipment sales are projected to increase by approximately 6% for full-year 2007 and to be up about 5% for the third quarter. Included in the yearly forecast is about two percentage points of positive currency translation. Net income is forecast to be around $1.55 billion for the year and in a range of $400 million to $425 million for the third quarter.

"Our efforts to grow a great business are meeting with considerable success," Lane said. "As a result, the company is poised to realize substantial benefits from powerful global economic trends, such as growing affluence, increasing demand for food, and the rising use of biofuels. In our view, these global developments hold great long-range potential for the company and its investors. On the basis of these factors, we believe John Deere is in an increasingly attractive position to deliver more sustainable, strong levels of performance over the long term."

Shares, which hit a 52-week high Tuesday, rose 92 cents early Wednesday to $121.58.